Reddit Soars 39% In Four Days As Technicals Signal Bullish Breakout

Reddit (RDDT) surged 6.96% in the latest session, marking its fourth consecutive day of gains with an aggregate 39.29% advance over this period. This robust performance reflects strong bullish momentum but warrants a multi-dimensional technical assessment to evaluate sustainability and potential inflection points.
Candlestick Theory
Recent candlestick patterns reveal a decisive bullish breakout. The stock formed a "Three White Soldiers" sequence from July 30 to August 1, confirmed by expanding ranges and consecutive closes near daily highs. This pattern resolved overhead resistance at $196.68, which now converts to primary support. Immediate resistance is established at the August 4 high of $203.73, with a secondary psychological barrier near the $220–230 zone (February 2025 peak). The latest candle's proximity to its high ($201.76 close vs. $203.73 high) signals persistent buying pressure.
Moving Average Theory
The moving average structure demonstrates a bullish configuration. The 50-day SMA (approximately $150.80) has crossed above the 100-day SMA ($138.20), forming a Golden Cross that reinforces the intermediate uptrend. Current price action holds well above both averages, indicating robust short-term momentum. Limited data precludes a 200-day SMA, but the slope of existing averages supports a positive bias.
MACD & KDJ Indicators
The MACD histogram shows accelerating bullish momentum, with the MACD line maintaining a widening gap above its signal line following a mid-July crossover. This aligns with KDJ readings: The %K line (86.5) has entered overbought territory above %D (78.2) after a bullish crossover in late July. While this confirms near-term strength, proximity to overbought KDJ levels warrants monitoring for consolidation signals.
Bollinger Bands
Volatility expansion is evident as price touches the upper Bollinger Band ($199.20, 20-day basis) on August 4. Bandwidth widened by 25% during the four-day rally, confirming breakout validity. Price trading above the 20-day SMA ($175.10) signals strength. A reversion toward the midline may emerge temporarily given the rapid ascent.
Volume-Price Relationship
Volume patterns validate the breakout. August 1 recorded the highest volume (27.3M shares) in the dataset, accompanied by a 17.47% surge—a classic accumulation signature. Subsequent sessions maintained elevated turnover (14.9M+ shares), diverging from the low-volume consolidation preceding July 30. This volume expansion supports continuation potential, though diminishing volume on the latest 6.96% gain signals near-term exhaustion risk.
Relative Strength Index (RSI)
The 14-day RSI reads 83.7, deeply within overbought territory (>70). While this reflects extreme momentum, its divergence from the price peak in February 2025 (when RSI peaked at 88) suggests residual upside capacity. Historically, RSI has remained elevated for extended periods during strong trends. Nevertheless, this reading implies elevated corrective risk, particularly if bearish divergences materialize.
Fibonacci Retracement
Applying Fibonacci to the swing low of $112.30 (June 13, 2025) and high of $203.73 (August 4, 2025): Key retracement supports emerge at $179.70 (23.6%), $168.00 (38.2%), and $158.00 (50.0%). The 23.6% level converges with the July 31 high ($162.88), reinforcing its significance as primary support. A sustained close above the 23.6% retracement would favor trend continuation, while failure opens the 38.2% retracement.
Confluence and Divergence Observations
Confluence exists around the $196–$199 zone (prior resistance, 23.6% Fibonacci, Bollinger upper band), now acting as support. The overbought RSI and KDJ readings diverge from MACD’s uninterrupted bullish momentum, suggesting potential consolidation. Volume-price alignment and candlestick patterns offset immediate reversal concerns. Resolution above $204 could trigger momentum targeting the $220 area, whereas slippage below $196 may invite profit-taking toward $179.70.