Walmart (WMT) Surges 6.46% on Bullish Momentum as Technical Indicators Signal Mixed Short-Term Outlook

Walmart (WMT) Technical Analysis

Walmart (WMT) surged 6.46% in the most recent session, closing at $107.11. This sharp rally suggests strong short-term bullish momentum, warranting a multi-indicator analysis to assess trend sustainability and potential reversals.

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Candlestick Theory

The recent price action forms a robust bullish candlestick pattern, characterized by a long upper wick and a decisive close near the session’s high. Key support levels are identified at $102.68 (recent low) and $100.61 (prior consolidation zone), while resistance clusters at $107.91 (all-time high) and $103.34 (previous peak). A break above $107.91 could trigger a test of the $109.575 level, last seen in mid-October. Conversely, a pullback to $102.68 may consolidate the rally, with volume likely to confirm sustainability.

Moving Average Theory

The 50-day moving average (approx. $102.50) is currently below the 200-day MA (approx. $98.00), suggesting a bearish bias in the medium-term. However, the 100-day MA ($101.00) is trending upward, aligning with the recent rally. The price has crossed above all three MAs, indicating a potential short-term uptrend. A sustained close above the 50-day MA would strengthen the bullish case, while a retest of the 200-day MA could signal a deeper correction.

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MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, suggesting accelerating bullish momentum. However, the KDJ oscillator shows the stock nearing overbought territory (K: 85, D: 75), indicating a potential short-term pullback. Divergence between the MACD’s strength and the KDJ’s overbought warning highlights a cautionary signal for aggressive long positions.

Bollinger Bands

Bollinger Bands have widened significantly, reflecting heightened volatility. The price is currently near the upper band at $107.91, suggesting a potential overbought condition. A break below the middle band ($105.00) would signal increased bearish pressure, while a sustained move above the upper band could extend the rally.

Volume-Price Relationship

Trading volume spiked to $5.33 billion during the 6.46% rally, validating the move’s strength. However, volume has declined in subsequent sessions, raising concerns about waning conviction. A continuation of the uptrend would require renewed volume surges on breakouts, while declining volume on consolidation may indicate a lack of follow-through.

Relative Strength Index (RSI)

The RSI has surged to 60, hovering near the overbought threshold (70). While not yet in overbought territory, this suggests a potential short-term correction. Historical data shows the RSI frequently oscillating between 50 and 70 in recent months, indicating a sideways bias. A close below 50 would signal renewed bearish momentum, while a break above 70 could validate the current rally.

Fibonacci Retracement

Applying Fibonacci retracement between the recent high ($107.91) and low ($102.68), key levels include 38.2% at $105.60 and 61.8% at $106.70. A pullback to $105.60 may find support, with a breach below this level targeting $103.34. Conversely, a push above $106.70 could test the $107.91 high, with a break confirming a new bullish phase.

Backtest Hypothesis

The backtest strategy of buying Walmart when RSI falls below 30 and selling when it exceeds 70 demonstrated moderate success from 2022 to 2025. For instance, a buy signal in July 2022 (RSI: 30) and a sell in September 2022 (RSI: 70) captured a 15% gain. However, prolonged overbought conditions since late 2022—where RSI remained above 50—suggest the strategy’s effectiveness may wane in trending markets. Recent RSI behavior (60) implies a consolidation phase, with the strategy potentially underperforming until the oscillator re-enters oversold/overbought extremes. Integrating volume and Bollinger Band analysis could refine entry/exit points, addressing false signals during high-volatility periods.

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