Strategy's 'Unicorn' Technical Pattern Puts 50% MSTR Stock Rebound in Play
Shares of Strategy Inc. (MSTR), a company known for its significant Bitcoin holdings, are showing signs of a potential rebound after a sharp decline. A rare bullish reversal signal, known as the "Abandoned Baby" pattern, has emerged on MSTR's daily chart, suggesting that the stock's downtrend may be losing momentum. This technical formation, considered a "unicorn" in market analysis due to its rarity and reliability, could pave the way for a substantial recovery.
The "Abandoned Baby" pattern is characterized by three distinct candlesticks: a long bearish candle, a small indecision candle that gaps lower, and a strong bullish candle that gaps higher, leaving the middle candle isolated or "abandoned". This pattern suggests a potential shift in market sentiment from bearish to bullish.
The emergence of this bullish signal follows a multi-month downtrend for MSTR, during which the stock price plummeted approximately 66% from its 2025 peak, reaching a low of $155.61 earlier this week. However, fueled by a recovery in the Bitcoin market and increasing expectations of a Federal Reserve rate cut in December, the stock has since rebounded by around 22.50%. On December 3, 2025, the stock price was at $188.01, which is 58.8% below its 52-week high of $455.90 from July 2025.
Several technical indicators support the bullish outlook for MSTR. Analyst Lark Davis noted the presence of a hammer candle near the lows and an oversold Relative Strength Index (RSI), both suggesting that sellers may be exhausted and that the risk-reward dynamics are shifting in favor of buyers. On the other hand, the current Relative Strength Index (RSI) of MSTR over the 14-day period is 60.937, which suggests that the stock is a Buy.
Adding to the positive sentiment, Strategy announced it had established a $1.44 billion U.S. dollar reserve. This financial cushion is intended to cover future dividend payments and debt servicing costs for a period of up to 21 months, reducing the need to sell its crypto holdings during periods of volatility. The company also signaled its continued confidence in its core strategy by purchasing an additional 130 bitcoins, increasing its total holdings. As of mid-2025, the company reported holding more than 590,000 BTC on its balance sheet.
However, Strategy's business model is overwhelmingly dependent on the appreciation of its Bitcoin portfolio. According to MSTR's financial reports, third-quarter 2025 revenue was approximately $129 million, yet net profit soared to $2.8 billion, primarily due to fair value changes in Bitcoin.
Despite the optimistic outlook, downside risks remain. Renewed volatility in the Bitcoin market or diminishing expectations for a December rate cut could adversely impact MSTR, particularly if spot ETF inflows decrease. JPMorgan estimates around $2.8 billion of passive outflows if MSTR is dropped from MSCI alone, and up to $8.8 billion if other index families follow. The final decision is due January 15, 2026, with any deletions implemented in the February 2026 index review.
Mizuho reaffirmed an "Outperform" rating and a $484 price target for MSTR stock on December 3, 2025, following a Q&A session with Strategy's CFO Andrew Kang. However, other analysts are less bullish. Trader XO argued that the stock topped at $455 in May 2025 and has not reclaimed that level.
The technical outlook suggests a potential recovery trajectory capped by resistance near $227 and $271. The stock's trajectory will likely remain tightly coupled to Bitcoin's price action, with these technical levels serving as crucial markers for both downside risk and potential recovery.
