D.R. Horton (DHI) Surges 7.8% on Two-Day Rally, Nears Key $157.28 Resistance as Bullish Momentum Builds

D.R. Horton (DHI) has experienced a sharp 7.80% rally on January 9, extending a two-day advance with a cumulative 12.90% surge. This recent momentum suggests a potential short-term reversal from a prior consolidation phase, with key resistance emerging near $157.28 (the January 9 close). The preceding bearish phase (notable declines from $165 to $137 in late December) forms a critical support zone around $140–$145, which now acts as a psychological floor for further buying.

Candlestick Theory

The recent two-day rally forms a bullish "twin candle" pattern, with the January 9 session closing near its high, indicating strong institutional participation. A potential "bullish engulfing" pattern emerges if the prior bearish candle (January 8) is fully contained within the January 9 body. Key support levels include $145.90 (January 8 close) and $139.31 (January 7 close), while resistance clusters at $146.48 (January 5 high) and $147.18 (January 19 high). A break above $157.28 may target $160.73 (December 4 high), but a failure to hold $145.90 could trigger a retest of the $138–$140 range.

Moving Average Theory

The 50-day MA (currently ~$142.50) is above the 200-day MA (~$136.50), suggesting a bullish trend. The 100-day MA (~$145.00) intersects with the recent $145.90 support level, creating a confluence zone. A crossover of the 50-day MA above the 100-day MA would confirm strengthening momentum. However, the 200-day MA may act as a trailing stop-loss if the price retraces below $139.50.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line, confirming bullish momentum. The KDJ oscillator (K=82, D=75) indicates overbought conditions, but the divergence between rising prices and moderating K values (from 90 to 82) suggests caution. A bearish crossover in the KDJ could precede a pullback, but the MACD’s strength implies the uptrend may persist unless the RSI drops below 50.

Bollinger Bands

Volatility has expanded, with the January 9 close near the upper band ($157.28), reflecting heightened short-term risk. The bands had previously contracted in late December (tight range of $143–$146), signaling a potential breakout. The current position near the upper band suggests a continuation of the rally is probable, but a reversal below the middle band ($149.50) may trigger a retest of the lower band (~$139.50).

Volume-Price Relationship

Trading volume spiked to 7.3 million on January 9, validating the price surge. However, the volume-to-price ratio (V/P) has declined slightly from 14.5 to 13.8 over the past two sessions, hinting at waning enthusiasm. A sustained increase in volume above 8 million would reinforce the bullish case, while a drop below 5 million may indicate a distribution phase.

Relative Strength Index (RSI)

The RSI is currently at 72, confirming overbought conditions. While this alone does not signal a reversal, a failure to hold above 60 could trigger a corrective phase. The RSI’s divergence from price (e.g., lower highs in RSI despite higher price) suggests caution, though the absence of a bearish crossover (RSI < MACD) implies the trend may remain intact for now.
Fibonacci Retracement
Key Fibonacci levels from the December 4 high ($160.73) to January 7 low ($138.34) include 61.8% at $144.50 and 50% at $149.50. The January 9 close at $157.28 aligns with the 23.6% retracement level, suggesting a potential extension target at $162.00. A breakdown below $144.50 may trigger a retest of the 38.2% level (~$141.50), but the 61.8% level remains critical for trend continuation.

The analysis highlights a confluence of bullish signals (MACD, volume, and Fibonacci levels) supporting the current rally, while overbought RSI and KDJ divergence caution against overextension. A breakdown below $145.90 would invalidate the short-term bullish case, with $139.31 as the next key support. Conversely, a sustained close above $157.28 may target $160.73, but traders should remain vigilant for volume contraction and RSI exhaustion.