VRTX Surges 16.61% on Bullish Engulfing Pattern Amid Key Fibonacci and Support Levels

Candlestick Theory

Vertiv Holdings (VRTX) has exhibited a four-day upward trend, with a 16.61% rally, suggesting strong bullish momentum. Key support levels are evident around the 140.85–141.62 range, as seen in late September, while resistance clusters near 162.22–168.99 (October 1–2). The recent price action shows a bullish engulfing pattern on October 1, confirming a reversal from prior bearish pressure. However, a potential bearish divergence is emerging in the RSI and MACD, which may signal a temporary pullback if the price fails to break above 168.99.

Moving Average Theory

The 50-day moving average (approx. 150–155) currently sits below the 200-day MA (approx. 135–140), indicating a short-term bullish bias but a longer-term neutral to bearish trend. The 100-day MA (around 145) acts as a dynamic support. The price has crossed above the 50-day MA in recent sessions, suggesting a potential short-term uptrend, but confluence with the 200-day MA is weak, highlighting a risk of mean reversion if volatility increases.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence in the last three days, aligning with the recent price surge. However, the KDJ indicator (Stochastic Oscillator) indicates overbought conditions (K: 85, D: 78), suggesting a high probability of a near-term correction. A bearish crossover in the KDJ could precede a pullback to the 145–150 support zone. Divergence between MACD and KDJ momentum indicators implies caution, as the former remains bullish while the latter warns of exhaustion.

Bollinger Bands

Volatility has expanded in the past week, with the upper band reaching 169.5 and the lower band at 140.5. The current price of 161.64 resides near the upper band, indicating overbought territory. A break above the upper band may confirm a continuation of the uptrend, but a retest of the lower band could trigger a consolidation phase. The 20-day SMA (approx. 155) serves as a critical midpoint for trend validation.

Volume-Price Relationship

Trading volume has surged during the recent rally, particularly on October 1 (2.03B USD) and October 2 (1.44B USD), validating the strength of the bullish move. However, volume has not yet exceeded the levels seen during the mid-September rally (e.g., 2.38B on September 23), suggesting reduced conviction in the current upleg. A drop in volume during a pullback would strengthen the case for a continuation of the uptrend.

Relative Strength Index (RSI)

The 14-day RSI stands at 68, nearing overbought territory. While not yet above 70, this level, combined with the KDJ’s overbought signal, suggests a high probability of a near-term correction. Historical data shows RSI frequently dips below 30 during corrections, implying a potential retracement to 140–145. Traders should monitor for a bearish crossover in the RSI to confirm a sell-off.

Fibonacci Retracement

Key retracement levels from the recent high of 168.99 to the low of 80 include 125.6 (61.8%), 146.4 (50%), and 161.6 (38.2%). The current price of 161.64 aligns with the 38.2% level, suggesting a potential consolidation phase before a break above 168.99. A failure to hold above 146.4 would indicate a deeper correction into the 125.6 zone.

Backtest Hypothesis

The backtest of VRTX using RSI overbought conditions from 2022 to 2025 shows mixed results, with a 3-Day win rate of 52.24% and a 30-Day win rate of 55.22%. The strategy’s maximum return of 3.40% on day 53 highlights its limited upside potential despite a moderate probability of success. This suggests that while RSI overbought signals may occasionally capture short-term gains, they lack reliability as standalone triggers. Combining RSI with volume analysis and Bollinger Band positioning could improve risk-adjusted returns, particularly in volatile markets where confluence with moving averages is weak.