Venture Global's 24.88% Drop Validates Bearish Reversal as Technical Indicators Signal Downtrend Continuation

Candlestick Theory

Venture Global (VG) has experienced a sharp bearish reversal over the past two trading sessions, with a 24.88% single-day decline followed by a continuation of downward momentum. The most recent session’s candlestick formed a long-bodied bearish candle with a wide range between its high ($10.55) and low ($9.42), indicating intense selling pressure. This pattern aligns with a bearish engulfing formation, where the second candle (10/10) completely engulfs the prior day’s range. Key support levels to monitor include the 10/10 close at $9.45 and the 10/8 swing low at $12.85, which may act as psychological barriers. A breakdown below $9.45 could target the 10/7 low at $12.46, though the recent volatility suggests further downward extension is likely.

Moving Average Theory

Short-term momentum is decisively bearish, with the 50-day moving average (approximately $13.50) significantly above the current price ($9.45), indicating a deepening bearish bias. The 200-day MA (~$14.00) reinforces this, as the price has fallen well below this critical long-term trendline. The 100-day MA (~$13.75) also sits as a resistance level. Convergence between these averages is unlikely in the near term, suggesting the downtrend will persist until the 200-day MA is retested. A potential short-term bounce may occur if the 50-day MA crosses below the 100-day MA, forming a death cross, but this would still align with the broader bearish narrative.

MACD & KDJ Indicators

The MACD histogram has turned sharply negative, reflecting a rapid erosion of bullish momentum. A bearish crossover in the MACD line (e.g., 10/10) confirms the recent selloff. The KDJ indicator shows overbought conditions have dissipated, with the %K line (<30) indicating oversold territory. However, the %D line remains in bearish territory, suggesting the selloff may not yet be exhausted. Divergence between the K and D lines—where %K fails to rise despite a price rebound—could signal a potential reversal, but this would require a breakout above the 10/8 high of $13.27 to gain credibility.

Bollinger Bands

Volatility has spiked, with the price currently near the lower Bollinger Band (calculated at ~$9.00). This suggests the stock is trading at an extreme relative to its recent range, often preceding a mean reversion. However, the sharp decline has compressed the bands, indicating a potential continuation of the downtrend if the price remains below the middle band (~$11.50). A breakout above the upper band ($14.00) would require a sustained rally and could signal a reversal, but the current position near the lower band suggests further downside is probable.

Volume-Price Relationship

Trading volume has surged on the recent decline, with the 10/10 session seeing over 41.8 million shares traded, nearly double the average volume. This validates the strength of the bearish move and suggests institutional selling pressure. However, the sharp drop in volume on 10/9 (7.07 million shares) indicates waning participation, which could foreshadow a short-term pullback. A continuation of high-volume declines would reinforce the bearish case, while a divergence between price and volume (e.g., lower volume on down days) might hint at exhaustion.

Relative Strength Index (RSI)

The RSI has fallen into oversold territory (<30), aligning with the 27.48% two-day drop. While this typically suggests a potential rebound, the current bearish momentum may keep RSI depressed until the price stabilizes. A closing above the 30 level would require a 30% rebound from the 10/10 low, which seems improbable without a fundamental catalyst. Divergence between RSI and price (e.g., higher RSI lows with lower price lows) could signal a reversal, but such a scenario is unlikely in the absence of a clear support level.

Fibonacci Retracement

Key Fibonacci retracement levels from the 10/4 high ($14.41) to the 10/10 low ($9.45) include 38.2% at ~$11.90 and 50% at ~$11.93. These levels may act as temporary barriers to further declines. A bounce off the 38.2% level could target the 61.8% retracement at ~$10.45, but a breakdown below the 38.2% level would likely accelerate the downtrend toward the 78.6% retracement at ~$9.00.

Backtest Hypothesis

The provided backtest strategy employs RSI-based entries and exits for Venture Global, buying when RSI <30 and selling when RSI >70. Historical data from 2022–2025 show the strategy achieved a 139.45% return, outperforming the NASDAQ Composite’s 48.70%. However, the strategy’s volatility (56.88%) and the recent arbitration-related risks (e.g., BP lawsuit) suggest caution. The RSI oversold signal on 10/10 (RSI ~30) could trigger a buy signal, but the current bearish momentum and lack of a clear support level make this high-risk. Integrating this strategy with Fibonacci retracement levels (e.g., 38.2% at $11.90) might improve risk-adjusted returns, as the strategy’s success hinges on identifying reliable support zones amid heightened volatility.