Dollar General Rises 3.05% on Bullish Moving Averages and MACD Momentum Amid Overbought RSI Conditions

Dollar General (DG) recently closed with a 3.05% gain, signaling a bullish reversal amid a volatile trading environment. Candlestick Theory reveals a strong green candle on the most recent session, with a long upper wick indicating rejection of higher prices and a decisive close near the high. Key support levels emerge at $132.57 (Dec 31 low) and $130.78 (Dec 12 low), while resistance clusters near $137.84 (Dec 26 high) and $139.83 (Dec 29 high). A potential bearish engulfing pattern forms around Dec 31, suggesting caution if the price tests the $132.57 level again.
Moving Average Theory shows the 50-day MA crossing above the 100-day and 200-day MAs, confirming a medium-term bullish trend. The 50-day MA currently sits at approximately $134.50, while the 200-day MA lingers near $105.50, indicating a strong upward bias. However, the 200-day MA’s lagging nature suggests the uptrend may consolidate before resuming, especially if the price dips below the 100-day MA (~$135.00).
MACD & KDJ Indicators reveal mixed signals. The MACD line (12,26,9) is positive at ~$2.50, with the histogram expanding, signaling growing momentum. However, the KDJ oscillator (14,3,3) shows the %K line at ~85 and %D at ~80, entering overbought territory. This confluence of bullish momentum and overbought conditions suggests a potential pullback, though the MACD’s strength implies a retracement rather than a reversal.

Bollinger Bands highlight heightened volatility, with the price near the upper band (~$139.83) and a 20-period width of ~$5.00. The recent contraction in band width during mid-December implies a potential breakout, which the current rally may confirm. If the price remains above the mid-band (~$136.00), the bullish trend could persist.
Volume-Price Relationship validates the recent rally, as the session’s ~3.54 million shares traded align with the 3.05% gain, indicating strong participation. However, volume has been inconsistent during the prior consolidation phase (Dec 12–Jan 2), suggesting the uptrend may face challenges if volume wanes during pullbacks.
RSI stands at ~72, nearing overbought levels, with a 14-day average gain of ~$1.80 and average loss of ~$0.70. While not yet in extreme overbought territory, the RSI’s flattening slope warns of potential exhaustion. A close below 60 would signal a retracement, though the RSI’s alignment with the MACD suggests a sharp rebound is probable.
Fibonacci Retracement levels drawn from the Dec 26 high ($137.84) to the Dec 31 low ($132.57) highlight critical areas: 38.2% at $135.50 and 50% at $135.20. The price’s recent pullback to these levels (Dec 30–Jan 3) and subsequent rebound suggest $135.20 is a key support. A break below 61.8% ($133.80) would trigger a deeper correction.
Confluence points emerge where the 50-day MA, Bollinger mid-band, and Fibonacci 50% level (~$135.20) converge, acting as a pivotal zone. Divergences appear in the KDJ and RSI, which signal overbought conditions, versus the MACD’s bullish momentum, creating a probabilistic tug-of-war between continuation and reversal. A sustained close above $137.84 would invalidate bearish scenarios, while a retest of $132.57 could trigger a broader consolidation phase.