Reddit Stock Surges 8.6% On Bullish Breakout With 58% Volume Spike

Candlestick Theory
Reddit's recent price action exhibits significant candlestick patterns. The June 4th session formed a robust bullish marubozu (close near high of $119.69, low at $110.87), decisively breaking the prior three sessions' consolidation range ($109.16–$115.38). This signals strong buying momentum. Key resistance is observed at the May 14th peak of $130.11, while support consolidates near $100–$105 (tested repeatedly during late May). The May 21st bearish engulfing pattern (high $103.5, close $95.85) previously confirmed selling pressure but was structurally overcome by subsequent higher lows.
Moving Average Theory
Reddit’s moving averages reflect a transitional trend. The 50-day MA ($112.30) recently crossed above the 100-day MA ($110.80), suggesting improving short-term momentum. However, both remain below the 200-day MA ($130.15), indicating the longer-term downtrend persists. The June 4th close ($118.21) reclaims all three averages—a bullish near-term signal. Sustainability hinges on holding above the 50-day MA, now immediate support.
MACD & KDJ Indicators
The MACD histogram turned positive in late May, with the signal line crossover confirming bullish momentum. Current MACD values (histogram: +1.20) support continuation potential. KDJ shows overbought conditions (K: 85, D: 79), though divergence is absent. Both oscillators align in suggesting upward bias, but KDJ’s overbought reading implies potential near-term consolidation.
Bollinger Bands
Volatility contracted sharply in late May (bands narrowed by 18%), preceding the June 4th breakout above the upper band ($116.50). Price now trades 1.5% outside the upper band—typically unsustainable without consolidation. Bandwidth remains low (15%), supporting possible sideways movement before further directional resolve. Key support shifts to the 20-period moving average (mid-band) at $110.80.
Volume-Price Relationship
Recent rallies validated volume surges. The June 4th breakout occurred on 8.65M shares—58% above the 30-day average—confirming conviction. Earlier high-volume declines (May 15th: 13.7M shares, -9.36%) signaled distribution, while the May 29–30 rebound saw above-average volume (10.7M and 7.55M shares), suggesting accumulation. Current volume supports bullish continuation near term.
Relative Strength Index (RSI)
RSI (14-period) sits at 66, approaching overbought territory (>70) but not yet extended. The indicator exited oversold conditions (<30) on May 30th and has since trended upward with price—no bearish divergence detected. While momentum favors bulls, RSI nears levels where pullbacks frequently emerge in this stock.
Fibonacci Retracement
Applying Fibonacci to the March–April decline (high: $142, low: $79.68) identifies key levels. The recent rally stalled at the 38.2% retracement ($125), with June 4th closing above the 23.6% level ($118). This breach suggests potential retest of $125 resistance. Support converges near the 50-day MA and the 23.6% Fib ($118), reinforcing its technical significance.
Confluence & Divergence Observations
Confluence occurs at $118–$120, where the 23.6% Fibonacci level, recent breakout candle, and volume validation align—establishing critical support. Multiple indicators (MACD, MA cross, volume) corroborate bullish near-term momentum. A notable divergence exists between RSI (non-overbought) and KDJ (overbought), suggesting the latter may trigger short-term profit-taking despite structural strength. The primary risk remains the 200-day MA ($130.15), which capped rallies twice in May. A sustained close above $125 may confirm trend reversal potential.