Dollar Tree Surges 3.81% on Bullish Candlestick Patterns and Key Fibonacci Retracement Level

Dollar Tree (DLTR) closed the most recent session with a 3.81% gain, marking a significant reversal from the preceding week’s volatility. This price action reflects a potential bullish continuation, supported by key candlestick patterns such as a bullish engulfing formation on January 27 and a piercing line on December 12. Key support levels are identified at $122.80 (Dec 31 low) and $119.53 (Dec 23 close), while resistance appears at $128.95 (Jan 2 high) and $132.48 (Dec 16 high). The recent close near $127.7 aligns with a 61.8% Fibonacci retracement level from the October 15 low ($86.01) to the December 16 high ($132.48), suggesting a potential consolidation zone.
Candlestick Theory
The recent 3.81% rally forms a bullish engulfing pattern, indicating strong buying pressure. The price has tested the $122.80 support twice without breaking below, reinforcing its significance. A breakout above $128.95 could target the $132.48 resistance, but a failure to hold $122.80 may trigger a retest of the $119.53 level. The hammer pattern on January 27 and the piercing line on December 12 suggest short-term bullish momentum, though divergence in the RSI and MACD could signal exhaustion if volume wanes.
Moving Average Theory
The 50-day moving average (approx. $109.50) is above both the 100-day (approx. $104.20) and 200-day (approx. $97.80), confirming a bullish trend on the intermediate horizon. The price has remained above the 50-day MA since late October, indicating a healthy uptrend. However, the 200-day MA remains a critical long-term support level; a close below $104.20 could invalidate the broader bullish thesis. The convergence of the 50-day and 100-day MA near $109.50 suggests a potential consolidation phase ahead.
MACD & KDJ Indicators
The MACD histogram has shown a recent expansion, with the line crossing above the signal line in early January, suggesting sustained momentum. The KDJ indicator currently shows overbought conditions (K=85, D=82), aligning with the recent 3.81% surge. However, a divergence between the K line and price action—where K fails to rise with new highs—may indicate a potential pullback. The MACD’s positive crossover and the KDJ’s overbought reading create a confluence for caution, particularly if volume fails to confirm further advances.
Bollinger Bands
Volatility has expanded in recent weeks, with the price testing the upper band ($128.95) on January 2. The bands have widened from a contraction in late December, signaling a breakout. The current price near $127.7 sits within the upper 1σ band, suggesting high volatility but not yet an overbought extreme. A sustained move above the upper band may trigger a mean reversion, while a breakdown to the lower band ($119.53) could indicate a reversal.

Volume-Price Relationship
Trading volume has surged during the recent rally, with the January 2 session seeing 2.79 million shares traded—a 30% increase from the prior week. This volume validates the price strength, but a decline in volume during the subsequent sessions suggests waning momentum. A divergence between rising prices and decreasing volume may warn of a potential reversal. Conversely, a surge in volume on a breakdown below $122.80 would confirm bearish exhaustion.
RSI
The 14-day RSI stands at approximately 68, nearing overbought territory. While not yet above 70, the RSI has formed a bullish divergence with price action—a new high in January was accompanied by a lower RSI high—suggesting potential exhaustion. A close above 70 would confirm overbought conditions, but the divergence implies caution for short-term traders.

Fibonacci Retracement
The 61.8% retracement level at $127.7 aligns with the current price, acting as a dynamic support/resistance zone. A break above $132.48 (78.6% retracement) would target the $135.00 psychological level, while a breakdown to $119.53 (50% retracement) may lead to a retest of the October 15 low ($86.01). The 38.2% level at $122.80 remains a critical pivot point for trend continuation.
Confluence between the RSI divergence, MACD expansion, and Fibonacci retracement levels suggests a high probability of consolidation or a pullback. However, the moving average alignment and bullish candlestick patterns indicate that the broader uptrend remains intact unless the $122.80 support fails. Traders should monitor volume and MACD histogram contraction for early reversal signals.