D.R. Horton Stock Plunges 13.47% In Four Days As Technicals Signal Deepening Bearish Trend

Comprehensive Technical Analysis of D.R. Horton (DHI)
D.R. Horton (DHI) declined 4.58% in the latest session, marking its fourth consecutive day of losses with a cumulative 13.47% drop. This sharp downturn sets the context for a multi-indicator technical assessment.
Candlestick Theory
Recent sessions exhibit a pronounced bearish sequence, featuring four long red candles with progressively lower closes. The most notable is the October 7th candle—a bearish marubozu closing near its low ($161.16) after gapping down from prior support at $170–$176. This signals relentless selling pressure. Key support now converges near $150 (psychological level and recent low), while resistance is firm at $158–$160, aligning with the previous consolidation zone. A breakdown below $150 may target $142 (August low).
Moving Average Theory
The 50-day SMA (~$165) crossed below the 100-day SMA (~$168) last week, confirming a bearish crossover and medium-term downtrend initiation. The 200-day SMA (~$156) offers tentative support, but the widening gap between short-term (50/100-day) and long-term (200-day) averages underscores accelerating downward momentum. Sustained trading below all three moving averages emphasizes entrenched bearish control.
MACD & KDJ Indicators
MACD (12,26,9) shows a deepening negative histogram below the signal line, reflecting strengthening bearish momentum. The KDJ oscillator entered oversold territory (K: 15, D: 22, J: 8), yet both indicators lack bullish divergence. While oversold KDJ readings often precede reversals, confluence with high-volume selling suggests further downside potential before stabilization.
Bollinger Bands
Bands expanded sharply during the four-day sell-off, indicating elevated volatility and directional conviction. Price closed below the lower band ($153) on October 9th—typically a short-term oversold signal. However, the absence of a recovery candle implies continued bearish pressure. A mean-reversion bounce toward the 20-day SMA (~$162) may emerge if volatility contracts.
Volume-Price Relationship
Volume surged to 6.57 million shares on October 9th—36% above the 30-day average—validating the breakdown. Distribution intensified during the decline, with higher volume on down days (October 7th and 9th) versus muted volume during minor recoveries. This volume profile confirms institutional selling and reduces the likelihood of an immediate reversal.
Relative Strength Index (RSI)
The 14-day RSI plunged to 28, entering oversold territory. Historically, DHI’s RSI below 30 has preceded technical rebounds (e.g., late July 2025). While this may foreshadow a relief rally, RSI divergence is absent; momentum aligns with price, suggesting oversold conditions may persist briefly. Traders should await RSI stabilization above 40 to signal exhaustion.
Fibonacci Retracement
Drawing Fibonacci levels from the July 22nd swing low ($142.84) to the October 3rd high ($174.95), key retracement supports emerge: 61.8% ($154.08), 78.6% ($149.75), and the 100% extension ($142.84). The price breached the 61.8% level decisively, targeting $149–$150. This zone aligns with the 200-day SMA, creating a high-probability technical support cluster.
Confluence and Divergence Observations
Confluence: The $149–$152 zone integrates 200-day SMA, Fibonacci 78.6% retracement, and psychological support—a critical make-or-break area. High-volume breakdowns below moving averages and Bollinger Band expansions reinforce bearish dominance.
Divergence: Despite oversold KDJ and RSI readings, neither shows bullish divergence against price lows. MACD confirms bearish momentum without opposing signals, reducing reliability of oversold warnings.
Conclusion
D.R. Horton’s technical structure has shifted bearish, evidenced by moving average crossunders, confirmed breakdowns of critical support ($158, $154), and high-volume selling. Oversold indicators hint at a near-term bounce toward $158–$160 (resistance), but the burden of proof rests on bulls to reclaim $162 (50-day SMA) to invalidate the downtrend. A decisive close below $149 risks accelerating selling toward $142. Probabilistically, the confluence of oversold signals and major support at $149–$152 favors consolidation or a relief rally—though sustained recovery requires volume-backed bullish reversal patterns.