UPS Plunges 3.15% As Bearish Engulfing Pattern Signals Prolonged Downtrend

Candlestick Theory
United Parcel (UPS) exhibits significant bearish momentum, closing at $100.85 with a 3.15% decline on July 7—its second consecutive down day, totaling a 4.44% loss. A bearish engulfing pattern emerged on July 7, where the candle’s body entirely consumed the prior session’s gains, suggesting strong selling pressure. Key resistance is observed near $104–$105, aligning with the July 1–3 highs, while support appears at $100.50 (June 30 low and psychological level). A breakdown below $100 may trigger further downside toward the $97–$98 zone, last tested in late May.
Moving Average Theory
UPS currently trades below all major moving averages (50-day, 100-day, 200-day), confirming a bearish trend structure. The 50-day MA (~$107) recently crossed below the 100-day MA (~$110), forming a "death cross," which typically signals prolonged bearish momentum. The 200-day MA (~$118) slopes downward, reinforcing long-term bearishness. The widening gap between shorter and longer-term MAs indicates accelerating downward momentum, with immediate overhead resistance at the 50-day MA.
MACD & KDJ Indicators
The MACD histogram shows deepening negative territory (signal line below zero), supporting bearish momentum. However, a minor bullish divergence appears as July’s price lows stabilized while MACD began flattening, hinting at potential exhaustion. The KDJ oscillators (K: 18, D: 25, J: 4) reside in oversold territory (sub-20), suggesting downside may be overextended. While this occasionally precedes reversals, the lack of K/D-line crossover warrants caution. Confluence exists with other indicators (e.g., RSI oversold), but KDJ alone remains non-confirmatory for a reversal.
Bollinger Bands
Volatility expanded sharply during UPS’s July drop, with price breaching the lower Bollinger Band ($102–$105 range) on July 7. Band width widened by 15% over three sessions, indicating strong bearish momentum. Current closure below the lower band (~$101) typically suggests oversold conditions, but persistent trading outside bands can signal trend continuation. A move back within bands (above $102) may signal short-term consolidation or relief bounce.
Volume-Price Relationship
Downside volume validates recent bearishness: July 7’s decline occurred on elevated volume (5.28M shares vs. 30-day avg. ~4.8M), confirming seller conviction. Conversely, July 1’s rally on high volume (6.82M) briefly defended $100 support, though subsequent volume faded during rebounds, weakening bullish reversals. Volume divergence appears as July 7’s closing price ($100.85) neared June 26’s low ($99.79), but volume was 27% lower, suggesting reduced panic.
Relative Strength Index (RSI)
The 14-day RSI reads 28, solidly in oversold territory (<30). While this may imply exhaustion, RSI can remain oversold in strong downtrends. A bullish divergence is developing: RSI formed a higher low on July 7 vs. June 23, even as prices set a lower low. Historically, similar divergences (e.g., late May) preceded short-term rebounds. Nonetheless, sustained trade above 30 RSI is needed to validate a reversal signal.
Fibonacci Retracement
Applying Fibonacci to the April 2025 high ($145.01) and June 2025 low ($95.70), key retracement levels emerge. Current trading sits near the 38.2% retracement ($100.50), which aligns with recent consolidation. A breach below exposes the 23.6% level ($97.50), while recovery above $104 (50% retracement at $103.80) is needed to challenge the 61.8% level ($109.70). Historical respect for the 50% Fib during May-June consolidations adds credibility to this zone as resistance.
Confluence & Divergences
Confluence at $100–$100.50 (psychological support, 38.2% Fib, June-July swing lows) strengthens its significance. A breakdown here could target $97–$98 (23.6% Fib, May lows). Divergences exist: oversold RSI and flattening MACD conflict with bearish moving averages and volume signals. These suggest downside may be limited near $100, but trend reversal requires decisive clearance above $104 (candlestick resistance, 50% Fib). Volume confirmation on rallies remains critical for sustainability.
Probabilistically, near-term consolidation or a technical bounce appears plausible given oversold extremes, though the primary trend remains bearish below $104. Traders should monitor $100 support integrity and volume dynamics for reversal confirmation.