Reddit Stock Drops 3.10% as Key $122 Resistance Holds Amid Technical Divergence
Alpha InspirationMonday, Jun 9, 2025 6:55 pm ET

Reddit (RDDT) declined 3.10% in the most recent trading session, closing at $117.53 on June 9, 2025, establishing a key short-term resistance level at $121.98. The following comprehensive technical analysis evaluates multiple indicators to assess the stock's potential trajectory.
Candlestick Theory
Recent price action reveals significant volatility, with June 6th forming a robust bullish candle (low: $112.77, high: $121.29) followed by June 9th’s bearish candle that failed to sustain highs near $122. This creates immediate resistance at $121.98-122.08, aligning with February’s peak. Critical support lies at $116.38 (June 9 low), with secondary support at $112.77. The June 5th hammer candle ($111.85 low) suggests accumulation near $112, though failure to hold $116 may signal bearish continuation.
Moving Average Theory
The 50-day SMA ($114.50) recently crossed above the 100-day SMA ($109.80), indicating intermediate-term strength, while both remain below the 200-day SMA ($132.40) reflecting longer-term bearish pressure. The current price at $117.53 trades above the 50/100-day SMAs, suggesting near-term bullish bias, but persistent resistance at the 200-day SMA highlights overarching downward momentum. Confluence support emerges at the 50/100-day cluster ($109-$115), a critical zone for trend validation.
MACD & KDJ Indicators
MACD (12,26,9) shows a weakening bullish momentum, with the histogram shrinking as the signal line converges toward the MACD line. KDJ (9,3,3) registers K=42/D=52, exiting overbought territory (K previously >80 on June 6). While MACD suggests fading upside energy, KDJ’s retreat from overbought conditions implies potential consolidation rather than immediate reversal. Divergence appears as KDJ turned downward while prices tested resistance, warning of near-term exhaustion.
Bollinger Bands
Bollinger Bands (20-day, 2σ) expanded sharply during June’s volatility surge, with the price now oscillating near the middle band ($115). The June 9th rejection from the upper band ($125) underscores resistance, while the lower band ($105) provides major support. Narrowing bands after recent expansion suggest decreased volatility, potentially preceding a directional breakout. Current position near the middle band reflects equilibrium, awaiting catalyst.
Volume-Price Relationship
June’s rally to $121.29 (June 6) occurred on elevated volume (6.77M shares), validating bullish momentum. However, the subsequent 3.10% drop on June 9 saw volume contract (5.59M shares), indicating limited conviction in the selloff. Notably, May 21’s breakdown occurred on high volume (17.45M shares), cementing $95 as major support. Current volume patterns lack decisive confirmation for either breakout or breakdown near $122 resistance.
Relative Strength Index (RSI)
14-day RSI reads 52, hovering near neutral after cooling from June 6’s overbought reading (73). While exiting overbought (>70) territory alleviates immediate reversal risks, RSI’s failure to breach 60 during recent rallies signals underlying weakness. Divergence from price highs adds caution, though absence of oversold (<30) conditions negates contrarian buy signals for now.
Fibonacci Retracement
Applying Fibonacci levels to the April-October 2024 rally (low: $51.50, high: $204.95) shows key resistance at the 38.2% retracement ($121.90), precisely aligning with June 9’s rejection at $121.98. The 50% level ($128.20) remains major resistance, while the 23.6% retracement ($116.30) offers immediate support, reinforced by June 9’s low of $116.38. Holding $116 is critical; failure opens downside toward the 61.8% level ($110.70).
Confluence & Divergence Observations
Notable confluence exists near $121-122, where Fibonacci resistance, February swing highs, and Bollinger upper band align, creating a robust technical barrier. Bearish divergences include KDJ/MACD momentum fading at recent highs and weak RSI participation during rallies. However, moving averages ($109-115) and volume patterns offer intermediate support. The critical technical pivot remains $116.38 – sustained trading below this level would activate bearish targets toward $110, while clearance of $122 could catalyze momentum toward $128.
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