DLR Surges 6.04% as Bullish Patterns and Moving Averages Signal Uptrend

Digital Realty Trust (DLR) has surged 6.04% in the most recent session, marking a two-day consecutive gain with a cumulative rise of 7.87%. The recent price action suggests a potential breakout from a consolidation pattern, with key support levels emerging around $160–$162 and resistance forming at $174–$175 based on historical price reactions.

Candlestick Theory

The recent bullish engulfing pattern on September 10th, where the candle’s body fully covers the prior session’s range, indicates strong buying pressure. This pattern is reinforced by the failure of the price to retest the $160.10 low from September 9th, suggesting $160–$162 may act as a dynamic support zone. Conversely, resistance at $174–$175, previously a peak in mid-August, now appears critical; a sustained close above this level could trigger a deeper rally.

Moving Average Theory

The 50-day moving average (~$170) and 100-day MA (~$168) are converging above the 200-day MA (~$165), signaling a medium-term bullish bias. The current price (~$173.89) resides above all three, confirming an uptrend. However, the narrowing gap between the 50- and 100-day MAs suggests momentum may be stabilizing, while a break below the 200-day MA could trigger a reevaluation of the trend’s sustainability.

MACD & KDJ Indicators

The MACD histogram remains positive and expanding, aligning with the recent upward thrust. The KDJ oscillator, however, shows overbought conditions (K ~82, D ~75), hinting at potential short-term exhaustion. While the MACD supports continuation, the KDJ’s overbought reading suggests caution for near-term pullbacks. Divergence between these indicators—bullish momentum vs. overbought levels—creates a confluence point where traders may anticipate a consolidation phase before a resumption of the trend.

Bollinger Bands

Volatility has expanded as the price approaches the upper Bollinger Band (~$174.93 on September 10th), reflecting heightened buying activity. The bands’ widening suggests a continuation of the current trend, but a reversal to test the middle band (~$168) could occur if the price closes below the lower band (~$166.49).

Volume-Price Relationship

Trading volume surged on the recent breakout (3.00M shares on September 10th), validating the price increase. However, volume has not yet surpassed the high-volume nodes seen during earlier rallies (e.g., 4.70M on April 9th), implying the current move may lack broad participation. A sustained increase in volume during a pullback would strengthen the case for a continuation of the uptrend.

Relative Strength Index (RSI)

The RSI (~70) is in overbought territory, consistent with the KDJ’s signal. While this warns of a potential correction, the RSI’s failure to peak above 75 (a common threshold for strong trends) suggests the uptrend may persist. A drop below 50 would signal a shift in momentum, but such a move would need to coincide with a breakdown in other indicators to confirm a reversal.

Fibonacci Retracement

Key retracement levels from the May–September rally (high of $184.22 to low of $151.295) include 38.2% at ~$168 and 61.8% at ~$164. The 61.8% level appears critical as a potential support zone if the price retraces, while the 38.2% level aligns with the 100-day MA, offering confluence for a bullish bounce.

Backtest Hypothesis

A backtest strategy could be constructed using the confluence of the 50-day MA crossover above the 200-day MA and RSI below 30 as a buy signal, while a 50-day MA crossover below the 200-day MA and RSI above 70 would trigger a sell. Historical data from April–September 2025 shows that this strategy would have captured the May–August rally but might have generated false signals during the consolidation in late August. Adjusting the RSI threshold to 40–50 for sell signals could improve accuracy, as the recent overbought condition did not immediately trigger a reversal.