Datadog Surges 11.6% On Bullish Engulfing Pattern And Golden Cross Signal

Candlestick Theory
The recent price action in Datadog displays a notable bullish reversal pattern. The two consecutive long green candlesticks on August 27th and 28th, 2025—gaining 4.29% and 7.01% respectively—form a Bullish Engulfing pattern after a prior downtrend. This signals strong buyer conviction, with the August 28th candle closing near its high ($140.96) after breaching the immediate resistance at $131.86. Key support now resides at $126.31 (August 26th low), while resistance is observed near the $141.36 swing high. The absence of upper wicks in the latest candles suggests minimal overhead supply, reinforcing upside potential.
Moving Average Theory
Datadog’s moving averages indicate a strengthening bullish trend across time frames. The 50-day SMA (currently near $129.50) crossed above the 100-day SMA (~$125.80) in early August, generating a Golden Cross that typically precedes extended uptrends. The 200-day SMA (approximately $120.20) maintains an upward slope, acting as dynamic support. The current price ($140.96) trading above all three averages confirms a multi-timeframe bullish bias. Confluence exists at $129–$131, where the 50-day SMA and recent consolidation lows align, offering a robust support zone for pullbacks.
MACD & KDJ Indicators
MACD (12,26,9) shows bullish momentum amplification, with the histogram expanding positively since August 26th and the signal line maintaining an upward trajectory after a mid-August crossover. KDJ oscillators align with this strength: The %K line (86) and %D line (79) are elevated but not overbought, reflecting accelerating upward momentum. No bearish divergence is evident, as both price and momentum indicators trend higher. However, KDJ’s proximity to overbought territory (>80) warrants monitoring for potential short-term exhaustion.
Bollinger Bands
Volatility expansion is evident as price breaks above the upper Bollinger Band ($137.50) on August 28th, a rare occurrence signaling powerful bullish momentum. This follows a band contraction period in late July, which often precedes directional breakouts. The bandwidth has increased by 18% over five sessions, confirming volatility-driven upside. While a reversion toward the 20-day SMA ($132.40) is statistically likely, the strong close above the upper band reduces immediate bearish probabilities, with the midline now acting as dynamic support.
Volume-Price Relationship
The 11.60% two-day surge was validated by rising volume, with August 28th volume (9.30 million shares) exceeding the 30-day average by 32%. This volume surge confirms institutional participation in the breakout. Notably, the August 8th high-volume decline (10.87 million shares) established distribution, but recent volume patterns suggest accumulation. Divergence is absent—price and volume trends are synchronized—supporting the sustainability of the uptrend.
Relative Strength Index (RSI)
The 14-day RSI reading of 74 edges into overbought territory (>70), reflecting robust short-term momentum. Historically, Datadog’s RSI can remain elevated during strong trends (e.g., it sustained >75 for 10 sessions in November 2024). While caution is prudent near overbought levels, the absence of bearish divergence (price and RSI both rising) and high-volume breakout reduce reversal risks. A consolidation near current levels could normalize RSI without undermining the trend.
Fibonacci Retracement
Applying Fibonacci retracement to the March–July 2025 decline (swing high: $170.08; low: $85.74) reveals critical levels. The recent breakout surpassed the 61.8% retracement ($136.20), converting it to support. The 78.6% level ($148.50) now serves as the next resistance. Confluence exists here with the psychological $150 barrier and the July 30th peak ($150.80). A decisive close above $148.50 would open a path toward the full retracement.
Confluence and Divergence Observations
Strong confluence is observed at $136–$138, where Fibonacci retracement, the 20-day Bollinger midline, and volume-weighted average price (VWAP) converge, solidifying this as a major support zone. No significant divergences between price and momentum oscillators (MACD, RSI, KDJ) are present. The primary technical risk remains the overextended RSI; however, volume validation and multi-indicator alignment suggest any pullback may be shallow and opportunistic. Upside continuation toward $148.50 appears probable, especially if volume sustains above average levels.