Reddit (RDDT) Falls 3.14% on Second Consecutive Day as Bearish Engulfing Pattern Confirms Renewed Selling Pressure

Reddit (RDDT) fell 3.14% in the most recent session, marking its second consecutive day of declines with a cumulative drop of 3.16%. Candlestick Theory reveals a bearish engulfing pattern on the second day of the decline, confirming renewed selling pressure. Key support levels are identified at $215 and $200, with resistance near $235 and $245. The recent break below the $230 level suggests further testing of the $215 support.
Moving Average Theory indicates a bearish bias as the 50-day ($230), 100-day ($225), and 200-day ($210) moving averages are in a descending order, with the price currently below all three. This alignment reinforces a medium-term downtrend, though a crossover above the 50-day MA could signal a short-term bullish reversal.
MACD & KDJ Indicators show divergent signals. The MACD histogram has contracted, suggesting weakening momentum, while the KDJ (Stochastic) oscillator is in oversold territory (<30), hinting at potential near-term exhaustion in the decline. However, the lack of a bullish crossover in the KDJ and the MACD’s bearish alignment suggest caution, as oversold conditions in a strong downtrend often fail to trigger sustained reversals.
Bollinger Bands are currently constricting, indicating a period of low volatility and potential consolidation ahead of a breakout. The price is positioned near the lower band, aligning with the oversold RSI reading. A breakout below the lower band could target the $200 psychological level, while a rebound above the mid-band might test $230.
Volume-Price Relationship shows mixed signals. The recent decline occurred on moderate volume, which weakens the conviction of the move. However, the absence of a surge in volume on the second down day suggests limited follow-through selling, creating a potential inflection point. A sharp volume spike on a bullish reversal could validate a short-term bounce.
RSI is below 30, confirming oversold conditions, but remains in this territory without a clear upward divergence. This underscores the risk of a prolonged bearish phase, as RSI in oversold zones during strong downtrends often lacks immediate reversal power.
Fibonacci Retracement levels derived from the recent high ($240.49) and low ($215.26) show critical support at the 61.8% level ($220.30) and resistance at the 50% level ($227.88). A break below the 61.8% retracement would likely extend the decline toward the 78.6% level ($213.00), while a rally above $227.88 could trigger a test of the 38.2% level ($224.10).
Confluence between bearish candlestick patterns, moving averages, and Bollinger Band positioning suggests continued downward bias. Divergences between the oversold RSI and weak volume, however, highlight a probabilistic risk of a short-term bounce. Traders should monitor volume surges and KDJ crossovers for early reversal cues, while Fibonacci levels and the 200-day MA ($210) remain critical for trend continuation.