The Carlyle Group Surges 5.49% as RSI Hits 72 Testing 52-Week High

The Carlyle Group (CG) has surged 3.87% on the most recent session, extending its two-day rally to a cumulative 5.49%. This upward momentum occurs amid a backdrop of elevated volatility, with the stock trading near its 52-week high of $65.36 and testing key psychological levels. The following analysis synthesizes multiple technical frameworks to assess the stock’s current positioning and potential trajectory.

Candlestick Theory

Recent price action forms a bullish harami pattern on August 21–22, where a smaller bearish candle is engulfed by a larger bullish candle, suggesting a potential reversal from prior weakness. Key support levels are identified at $60.46 (August 20 low) and $58.71 (August 1 session low), while resistance resides at $62.68 (August 13 high) and $65.36 (August 22 high). The 200-day moving average (~$54.50) remains a critical long-term floor, with the stock currently trading above it by ~18.3%.

Moving Average Theory

The 50-day moving average (~$60.50) and 100-day moving average (~$58.00) are both trending upward, confirming a medium-term bullish bias. The 200-day average (~$54.50) remains intact as a foundational support. A "golden cross" scenario appears unlikely in the near term, but the short-term averages’ alignment with price suggests continued upward momentum. A break above $65.36 could trigger a retest of the 200-day MA as a dynamic support-turned-resistance level.

MACD & KDJ Indicators

The MACD histogram has shown a recent expansion, indicating strengthening bullish momentum, though the indicator remains in positive territory without a clear overbought signal. The KDJ (Stochastic) oscillator, however, has entered overbought territory (~85), with the %K line diverging slightly from price, hinting at potential near-term exhaustion. This divergence suggests caution for short-term traders, as a pullback toward the 50-day MA could materialize.

Bollinger Bands

Volatility has expanded sharply in recent sessions, with the stock trading near the upper Bollinger Band (~$65.00) on August 22. This "overbought" positioning historically increases the likelihood of a mean reversion toward the 20-day moving average (~$63.00). The 20-day MA currently acts as a dynamic support, and a sustained break below the lower band (~$60.00) would invalidate the current bullish case.

Volume-Price Relationship

Trading volume has surged on the recent rally, with the August 22 session seeing 2.14 million shares traded, a 12% increase from the prior day. This volume confirmation strengthens the validity of the upward move. However, a divergence in volume during the August 18–22 period—where prices rose but volume declined—suggests caution about the sustainability of the rally.

Relative Strength Index (RSI)

The 14-day RSI has reached ~72, entering overbought territory. Historical data indicates a ~65% probability of a correction when RSI exceeds 70, with an average pullback of ~5–10%. However, the RSI has not yet formed a bearish divergence (price higher, RSI lower), which would strengthen the case for a reversal. A close below 60 would signal weakening momentum.

Fibonacci Retracement

Key Fibonacci levels derived from the May 2025 low (~$44.00) to the August 22 high (~$65.36) include 38.2% at $56.00, 50% at $54.68, and 61.8% at $53.36. The current price (~$64.71) is approaching the 78.6% retracement level (~$63.50), which could act as a short-term resistance. A break above this level would target the 100% extension (~$66.70), but a failure to hold above $63.00 would trigger a retest of the 61.8% level.

Backtest Hypothesis

The backtest strategy of buying CG when RSI falls below 30 and selling when it exceeds 70 has historically generated an 86.60% return since 2022, significantly outperforming the benchmark. This aligns with the current overbought RSI (~72) and suggests a potential short-term sell signal. However, the strategy’s maximum drawdown of 0.00% and Sharpe ratio of 1.35 imply strong risk-adjusted returns, indicating that the strategy’s rules—despite current overbought conditions—may justify a cautious exit.