CoStar Group Jumps 3.3% As Technicals Signal Potential Reversal

CoStar Group (CSGP) advanced 3.30% to close at $75.69 in the latest session, with trading volume reaching 3.02 million shares. This follows a period of heightened volatility, including a dramatic 10.31% decline on April 30, 2025, after earnings. The technical landscape reveals several notable developments across key indicators.
Candlestick Theory
Recent price action shows a bullish reversal pattern emerging from the $71.35 low on June 2, forming a hammer candlestick with a long lower wick. This was confirmed by yesterday's strong white candle that closed near the session high. Critical resistance is now observed between $76.37-$77.10 (May highs), while the $71.35-$72.84 zone establishes a significant support floor. The rejection of sub-$73 levels and subsequent bullish engulfing pattern may indicate potential trend reversal confirmation if prices sustain above $75.75.
Moving Average Theory
The 50-day moving average ($76.90) and 100-day MA ($77.45) are both trending downward and currently cap upside movement, while the 200-day MA ($75.20) provides underlying support. Price remains below the shorter-term averages but notably reclaimed the 200-day MA in yesterday's rally. A sustained break above the 50-day MA would be required to signal intermediate trend improvement. The current configuration suggests continued bearish near-term momentum with the possibility of basing formation.
MACD & KDJ Indicators
The MACD histogram has turned positive for the first time since early May, crossing above its signal line near the -1.00 level. This bullish crossover aligns with KDJ indicators emerging from oversold territory, where the %K line (32) has crossed above %D (29). While these signals remain in early development, they suggest building upward momentum after the oversold conditions created by the late-April selloff. Traders should monitor for confirmation through sustained MACD line expansion.
Bollinger Bands
A pronounced volatility contraction occurred in late May, with bands narrowing to their tightest spread (1.7 points) since February. Yesterday's breakout reached the upper band at $75.75, signaling a volatility expansion. The close near the upper band combined with expanding volume suggests continuation potential. However, failure to hold above $75.50 may trigger mean reversion toward the $74.20 midline support.
Volume-Price Relationship
Volume surged 12% during yesterday's advance, exceeding the 20-day average by 18% and validating the breakout. The highest-volume sessions in the dataset align with key directional moves: distribution occurred during the April 30 collapse (12.5M shares), while accumulation appeared near the $72-73 support zone with consistent volume expansion. Current volume patterns support the bullish reversal thesis, provided follow-through volume materializes.
Relative Strength Index (RSI)
The 14-day RSI has rebounded from 28 (deeply oversold) to 47.8, clearing the 45 threshold that previously capped corrective rallies. This momentum shift is significant as it marks the first time since March that RSI has climbed from oversold territory without failing at neutral. While not yet overbought, the indicator shows improving internal strength. Historical RSI divergences have proven reliable, including the April bearish divergence that preceded the 10% drop.
Fibonacci Retracement
Applying Fibonacci levels to the April 29 high ($83.00) and May 7 low ($74.02) reveals key thresholds: the 23.6% retracement at $76.15 and the 38.2% level at $77.48. Yesterday's close sits squarely within the initial recovery zone, with the $76.15 level representing immediate resistance. A close above $76.15 would open the path toward $77.48, where significant supply exists. The 61.8% retracement at $79.33 aligns with the 200-day MA resistance.
Confluence occurs at the $76.15-$76.37 zone, where the 23.6% Fibonacci level, May 21 swing high, and 50-day MA converge. A break above this resistance cluster would significantly strengthen the technical picture. Notable divergence existed in late May when price tested $72.84 on higher lows while RSI made higher lows, foreshadowing this rebound. Probabilistically, the volume-backed bullish candlestick reversal from major support, confirmed by momentum indicator crossovers, suggests a tradable bounce is underway, though sustainability requires clearance of the $76.37 resistance cluster.