DraftKings Stock Extends Rally 17.29% Amid Overbought Signals

DraftKings (DKNG) shares rallied 3.26% on June 24, 2025, closing at $42.81 and marking the sixth consecutive daily gain for a cumulative 17.29% surge. This analysis evaluates the technical context of this move.
Candlestick Theory
The recent six-session uptrend features successive green candles, with June 24’s candle showing a notable upper shadow (high: $43.225, close: $42.81), suggesting resistance near $43.20–$43.50—a zone aligning with February and March 2025 peaks. The absence of bearish reversal patterns like doji or engulfing implies lingering bullish momentum. Key near-term support sits at $41.63 (June 24 low), reinforced by the prior day’s base at $39.96. A breach of $41.63 may trigger profit-taking.
Moving Average Theory
DraftKings trades comfortably above its key moving averages: the 50-day (~$38.00), 100-day (~$38.50), and 200-day (~$36.00). The current price (~$42.81) positions these MAs bullishly (50 > 100 > 200), confirming a sustained uptrend. The 50-day MA has recently crossed above the 100-day and 200-day, signaling strengthening intermediate momentum. Holding above $42.00 sustains the bullish bias, while a reversal below $41.00 may initiate consolidation.
MACD & KDJ Indicators
The MACD likely shows a bullish crossover, with the MACD line above the signal line—consistent with the six-day advance. However, the KDJ indicator reveals overbought conditions, with %K near 94 (exceeding the 80 threshold), suggesting near-term exhaustion. This divergence—MACD momentum strength versus KDJ’s warning—hints at potential consolidation. A MACD convergence or bearish crossover in coming sessions would heighten reversal risks.
Bollinger Bands
June 24’s price spike to $43.225 likely exceeded the upper Bollinger Band (20-day SMA ~$39.50, standard deviation ~$1.50), indicating extreme volatility and overextension. Such excursions often precede pullbacks toward the 20-day SMA ($39.50–$40.00). Band width has expanded during the rally but may contract if volatility normalizes, supporting a near-term consolidation scenario.
Volume-Price Relationship
Volume patterns validate the rally, with June 20 recording the highest volume (14.05M shares) during the upswing. However, June 23–24 saw lower volume (8.0M and 9.4M shares) despite higher closes—a bearish divergence suggesting waning participation at current levels. This contrasts with the June 13 sell-off (10.17M shares), which featured higher volume, underscoring resistance near $43.00. Sustained upside requires volume expansion; otherwise, the move appears vulnerable.
Relative Strength Index (RSI)
The 14-day RSI reads ~80, solidly in overbought territory (>70). Historically, such levels precede pullbacks in DraftKings, though overbought conditions can persist during strong trends. The RSI’s warning aligns with KDJ’s overbought signal, urging caution. Traders should monitor for RSI divergence—a declining RSI alongside rising prices—to gauge exhaustion probability.
Fibonacci Retracement
Applying Fibonacci to the swing low of $32.44 (April 21, 2025) and the recent high of $43.225 yields key levels: 23.6% ($40.68), 38.2% ($39.10), and 50% ($37.83). Confluence exists at $40.68–$41.00, where the 23.6% retracement aligns with psychological support and the 20-day SMA. A pullback could target this zone, while a close above $43.50 invalidates bearish technical signals.
Conclusion
Confluence emerges across indicators: The overbought RSI/KDJ readings, Bollinger Band extension, and volume divergence signal near-term exhaustion near $43.00–$43.50. However, the bull trend remains intact, supported by moving averages and MACD momentum. Key risks include failure to hold $41.63 (candlestick support) or volume contraction. Downside targets center on the $40.68–$41.00 Fibonacci confluence, while sustained closes above $43.50 would neutralize bearish divergences and signal continuation.