**Copart's 3.84% Surge on Bullish Engulfing Pattern as 50-Day MA Crosses 200-Day, RSI Hits 72 Near Overbought**

Candlestick Theory

Copart’s recent price action reveals a bullish engulfing pattern on the 2025-09-04 session, where the candle closed near the high at $49.97, surpassing prior resistance levels at $48.81 and $48.61. Key support levels are identified at $48.12 (2025-09-03) and $47.61 (2025-08-20), while resistance is clustered near $49.97 and $50.11 (2025-08-29). The formation of a “piercing line” on 2025-08-29 suggests a potential reversal from bearish to bullish momentum, reinforced by the 3.84% surge in the most recent session.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average (currently around $49.50), which has crossed above the 100-day ($48.80) and 200-day ($48.20) averages, signaling a bullish trend. The 200-day line remains a critical threshold; if the price sustains above $48.61, it could confirm a long-term uptrend. Divergence occurs in the mid-term: while the 50-day MA suggests acceleration, the 100-day MA’s flattening near $48.80 indicates potential consolidation.

MACD & KDJ Indicators

The MACD histogram shows positive divergence (MACD line above signal line) since late August, confirming strengthening bullish momentum. However, the RSI (discussed below) nearing overbought territory at 70+ raises caution. The KDJ oscillator, with %K at 85 and %D at 75 as of 2025-09-04, suggests overbought conditions and a possible pullback. A bearish crossover in the KDJ could precede a correction, though the MACD’s strength implies the uptrend may persist.

Bollinger Bands

Volatility has expanded recently, with the 20-day Bollinger Bands widening from a contraction in late August. The price currently sits near the upper band at $50.11, indicating heightened buying pressure. A retest of the lower band at $47.61 (2025-08-20) would validate the band’s width and potential for a mean reversion trade. The “squeeze” pattern observed in mid-August (narrow bands followed by a breakout) has materialized, suggesting continued volatility.

Volume-Price Relationship

Trading volume spiked on the 2025-09-04 session (8.69M shares) to confirm the 3.84% rally, aligning with the bullish engulfing pattern. However, volume has declined in subsequent sessions, which may indicate waning momentum. A divergence between price highs and volume lows (e.g., 2025-09-03 volume at 6.43M vs. 2025-09-04’s 8.69M) suggests caution: while the price is rising, volume is not sustaining the move.

Relative Strength Index (RSI)

The RSI has surged to 72 as of 2025-09-04, entering overbought territory. This historically warns of potential short-term corrections, though the uptrend may persist if volume remains strong. A drop below 50 would signal weakening momentum, while a rebound above 60 could prolong the rally. Caution is warranted given the RSI’s tendency to remain overbought in strong trends, but a failure to hold above 60 may precede a pullback.

Fibonacci Retracement

Key Fibonacci levels from the 2025-05-23 low ($53.67) to the 2025-06-12 high ($50.99) highlight critical support/resistance. The 61.8% retracement level at $49.30 aligns with recent resistance, suggesting a potential consolidation zone. A break above $49.97 (the 78.6% level) would target $50.50 (the 100% extension), while a breakdown below $48.12 (38.2% level) could trigger a test of $47.61.

Backtest Hypothesis

A backtest strategy combining the 50-day/200-day MA crossover and RSI thresholds (buy when MA crosses above and RSI <30, sell when RSI >70) would have captured the late August rally. However, the recent 3.84% surge with RSI at 72 challenges this model, indicating overbought conditions may not immediately reverse in strong trends. Integrating Bollinger Band width and volume trends (e.g., requiring volume expansion on breakouts) could refine the strategy, reducing false signals during volatile periods like late August.