Western Digital Surges 8.61% on Bullish Candlestick Pattern and Golden Cross, Eyes $273 Resistance

Western Digital (WDC) closed the most recent session with an 8.61% gain, driven by a bullish candlestick pattern marked by a long upper shadow and a strong close near the high of the day. This suggests aggressive buying pressure and potential short-term momentum. Key support levels are evident around $250–$260 (noted in prior weeks’ troughs), while resistance is forming at $283–$290, where multiple prior highs cluster. The recent rally appears to have broken above a descending trendline connecting earlier highs, indicating a possible shift in sentiment.

Candlestick Theory

The price action over the past week reveals a "Bullish Abandoned Baby" pattern on February 6–5, where a doji formed between a bearish and bullish candle, signaling potential trend reversal. Additionally, the recent session’s candlestick—a strong white candle with a high volume—confirms a break above key resistance. However, the prior week’s sharp decline (February 4–5) formed a "Hanging Man" pattern at $254.905, suggesting lingering bearish caution. The convergence of bullish momentum and oversold conditions in early February (RSI below 30) has now reversed, pointing to a possible continuation of the upward trend.

Moving Average Theory

Short-term moving averages (50-day and 100-day) are currently above the 200-day MA, forming a "Golden Cross" configuration, which historically signals a bullish trend. The 50-day MA is accelerating upward, aligning with the recent price surge. However, the 100-day MA is starting to flatten, suggesting potential near-term exhaustion. The 200-day MA remains a critical support level at approximately $210–$220, and its intactness validates the long-term uptrend. A close below this level may trigger a reevaluation of the trend’s sustainability.

MACD & KDJ Indicators

The MACD histogram has expanded positively over the past three sessions, confirming the strengthening of the bullish momentum. The KDJ indicator (Stochastic) shows the %K line crossing above the %D line in overbought territory (above 80), which typically signals a potential pullback. However, the recent divergence between the KDJ and price action—where the K line fails to make a higher high while the price continues to rise—suggests caution. This divergence may indicate a short-term overbought condition, though the strong volume accompanying the rally could extend the uptrend.

Bollinger Bands

Bollinger Bands have recently expanded after a period of contraction in late January, indicating a breakout in volatility. The price is currently trading near the upper band, a zone that often precedes a retracement. The bands’ width (around 25–30 points) reflects heightened volatility, consistent with the sharp 8.61% move. A retest of the lower band (currently around $230–$240) may occur before the trend resumes, particularly if the RSI stabilizes above 50.

Volume-Price Relationship

Trading volume surged on the February 6 rally, exceeding 9.9 million shares, the highest in over a month. This validates the strength of the price move and suggests institutional participation. However, the volume declined slightly on the following session (February 5), which may indicate a temporary pause in buying pressure. The inverse head-and-shoulders pattern formed in early February was confirmed by rising volume on the breakout, reinforcing the reliability of the bullish signal.

Relative Strength Index (RSI)

The RSI has surged above 70, entering overbought territory, which historically suggests a high probability of a short-term correction. However, in strong trends, RSI can remain overbought for extended periods. The recent 8.61% gain pushed the RSI to 75–80, but the absence of immediate bearish divergence (price highs vs. RSI highs) suggests the trend may persist. A close below 50 would signal weakening momentum, while a sustained level above 60 would validate continued strength.

Fibonacci Retracement

Applying Fibonacci levels to the recent $230–$290 range reveals critical retracement levels at $273 (38.2%), $263 (50%), and $253 (61.8%). The recent rally has stalled near the 38.2% level ($273), suggesting potential resistance. A break above this level could target $285–$290, aligning with the February 3–4 highs. Conversely, a pullback to the 50% level ($263) may find support, with the 61.8% level ($253) acting as a secondary target. The confluence of Fibonacci levels and moving averages at $250–$260 underscores this zone as a pivotal battleground for the next phase of the trend.