PDD Holdings Surges 3.67% as 50-Day MA Crossover and MACD Golden Cross Fuel Momentum

Candlestick Theory

PDD Holdings' recent candlestick action suggests a continuation of the bullish trend, with the 3.67% rally on 2025-08-15 forming a strong confirmation pattern. Key support levels are emerging around $113–$114, evidenced by prior bounces in late July and early August, while resistance clusters near $119–$120 have been tested multiple times. The price structure shows a series of higher lows and higher highs over the past two weeks, with a potential bullish engulfing pattern forming on 2025-08-15. However, a bearish divergence in the RSI (discussed later) hints at overbought conditions, suggesting a temporary pullback to the $116–$117 Fibonacci retracement level (derived from the July–August rally) may occur before further upside.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average (~$116.50), which is above the 100-day (~$115.20) and 200-day (~$113.80) averages, confirming a healthy uptrend. The 50-day MA is acting as dynamic support, with the price holding above this level since late July. The 200-day MA appears to be forming a bullish crossover with the 100-day MA, suggesting long-term trend reinforcement. However, the 50-day MA is approaching the 100-day MA, indicating potential for a flattening of the trend if the price consolidates near $116–$117.

MACD & KDJ Indicators

The MACD line crossed above the signal line in early August, forming a golden cross that aligns with the recent bullish breakout. This suggests momentum is accelerating, though the histogram is narrowing slightly, indicating a possible pause in the trend. The KDJ stochastic oscillator shows the %K line (~85) and %D line (~80) in overbought territory, suggesting a short-term correction may be due. Divergence between the KDJ lines and the price action (rising highs with declining stochastic values) adds caution, though the RSI (discussed below) remains in overbought territory, balancing the signal.

Bollinger Bands

Volatility has expanded recently, with the 20-day Bollinger Bands widening to reflect the aggressive rally. The price is currently near the upper band (~$119), suggesting overbought conditions and potential for a reversion toward the mean (~$117). The bands’ contraction in late July preceded the breakout, acting as a consolidation phase before the surge. A breakdown below the lower band (~$114) would invalidate the bullish case, but current positioning favors a continuation within the upper half of the band.

Volume-Price Relationship

Trading volume has surged on the recent rally, with the 2025-08-15 session recording 10.09 million shares traded—well above the 30-day average. This supports the sustainability of the bullish move, as strong volume confirms buying pressure. However, volume on the previous upday (2025-08-12) was lower, suggesting a potential exhaustion phase. A decline in volume during the next rally would signal weakening momentum, while a new volume high would reinforce the trend.

Relative Strength Index (RSI)

The 14-day RSI (~75) is in overbought territory, exceeding the 70 threshold. While this typically warns of a potential correction, the price has shown resilience due to sustained volume and bullish momentum indicators. A drop below 60 would signal a shift in sentiment, but the RSI’s alignment with the MACD golden cross suggests the overbought condition may persist for several more sessions. Divergence between the RSI and price action (e.g., a new high without a new RSI high) would heighten caution.

Fibonacci Retracement

Key Fibonacci levels from the July–August rally (low: $108.86, high: $119.92) include 61.8% at $116.76 and 78.6% at $113.94. The price is currently testing the 61.8% level, which coincides with the 50-day MA. A breakdown below this level would target the 78.6% retracement at $113.94, aligning with recent support. Conversely, a break above the $119.92 swing high would invalidate the Fibonacci structure and open the path to $122.

Backtest Hypothesis

The backtest strategy of buying PDD Holdings on MACD golden cross signals and holding for 14 days yielded a 42.77% return, outperforming the benchmark by 3.32% while maintaining a 0.00% maximum drawdown. This aligns with the technical analysis, where the MACD golden cross in early August preceded the recent rally. The strategy’s conservative nature—evidenced by the low Sharpe ratio (0.25) and modest CAGR (10.92%)—reflects the stock’s recent sideways-to-bullish trend. However, the overbought RSI and KDJ divergence suggest the strategy may face challenges in sustaining similar returns during periods of heightened volatility or bearish momentum.