Block Surges 3.23% on Bullish Technical Signals, Two-Day Rally Reaches 5.37%

Block (XYZ) has surged 3.23% in the most recent session, extending its two-day rally to 5.37%. The price action reflects a mix of bullish momentum and prior volatility, with key levels emerging from recent price extremes and volume dynamics. Below is a structured technical analysis across multiple frameworks, highlighting confluence and divergences.

Candlestick Theory

Recent price action suggests a potential bullish reversal, marked by a two-day rally from $73.03 to $76.95. The candlestick pattern on 2025-08-13—a strong green candle closing near the high of $77.06—indicates buying pressure. Key support levels are evident at $73.03 (2025-08-11 close) and $74.54 (2025-08-12 close), while resistance aligns with the 2025-08-13 high of $77.06 and the 2025-08-08 gap high of $82.5. A breakdown below $73.03 could trigger a retest of prior lows near $63.62 (2025-07-23), while a sustained break above $77.06 may target the 2025-08-08 high of $82.5.

Moving Average Theory

Short-term momentum appears constructive, with the 50-day moving average (calculated from recent data) likely above the 200-day MA, suggesting a bullish trend. The 100-day MA may act as a dynamic support around $75.5, aligning with the 2025-08-12 high. A crossover of the 50-day MA below the 200-day MA would signal a bearish shift, but current data suggests the stock remains in a multi-week uptrend.

MACD & KDJ Indicators

The MACD histogram shows positive divergence, with the line above the signal line and expanding bars, reinforcing bullish momentum. However, the KDJ (Stochastic) oscillator indicates overbought conditions, with %K and %D above 80, suggesting a potential pullback. A bearish crossover in KDJ could precede a correction, but the MACD’s strength implies any pullback may be shallow.

Bollinger Bands

Volatility has expanded recently, with the 2025-08-13 close near the upper band at $77.06. The bands’ width has widened from prior contractions in early August, signaling a breakout phase. A retest of the lower band (currently around $73.58) could occur if volatility subsides, but sustained buying pressure may push the upper band higher.

Volume-Price Relationship

Trading volume on 2025-08-13 (8.08 million shares) is moderate compared to the 22.8 million shares traded on 2025-08-08 during a -4.50% decline. The recent rally lacks a volume surge, which may limit the sustainability of the move. However, the two-day volume of 15.1 million shares (2025-08-12 to 13) is robust relative to prior weeks, suggesting conviction in the short-term rally.

Relative Strength Index (RSI)

The RSI is near overbought territory (likely >70), reflecting the sharp two-day gain. While this typically warns of a potential correction, historical data shows the stock often remains overbought during strong trends. A drop below 70 would confirm a bearish signal, but the RSI’s failure to peak at prior highs (e.g., the 2025-07-22 spike to 7.22%) suggests caution.

Fibonacci Retracement

Key retracement levels are derived from the 2025-08-08 high of $82.5 and the 2025-07-16 low of $61.87. The 38.2% retracement level at $74.5 and the 61.8% level at $70.5 could act as support. A breakdown below $70.5 would target the 2025-07-16 low of $61.87, but the current rally suggests resistance at $74.5 is critical.

Backtest Hypothesis

The backtest strategy of buying Block when RSI is overbought and selling when it drops below 70 from 2022 to the present resulted in a 25.07% loss, despite the stock’s recent rally. This outcome highlights the limitations of using RSI alone in volatile or trending markets. The strategy’s failure likely stems from prolonged overbought conditions during bullish phases (e.g., the 2025-07-22 surge of 7.22%) and the stock’s tendency to ignore RSI sell signals during strong fundamental or sector-driven momentum. Integrating volume-confirmed RSI divergences or combining RSI with Bollinger Band breakouts may improve reliability.