Reddit Stock Jumps 6.89% to $212.81 Amid Bullish Technical Signals

Reddit (RDDT) shares surged 6.89% in the most recent session, closing at $212.81 amid a trading range of $198.75-$212.98. This strong upward move occurred on volume of 8.18 million shares, capping a notable recovery from the $160.59 close on July 31. The following technical analysis evaluates key indicators across multiple frameworks.
Candlestick Theory
Reddit's chart demonstrates a bullish engulfing pattern formed on August 1st, where a 17.47% gain on exceptional volume (27.3 million shares) overwhelmed the previous session's bearish sentiment. This pattern validated the psychological $180 support level, which has since transformed into a technical floor. Immediate resistance resides near the August 6th high of $212.98, with significant historical resistance around the $220-230 zone established in February. The July 29th long-legged doji signaled indecision before the current uptrend emerged.
Moving Average Theory
The 50-day moving average ($156) recently crossed bullishly above the 200-day average ($128), confirming a major trend reversal. Price currently trades above all key moving averages (50/100/200-day), with the ascending 50-DMA providing dynamic support. The 50/100-DMA golden cross in early July preceded the current 35% price surge, while the 200-DMA slope turned positive in late June, reinforcing long-term bullish alignment.
MACD & KDJ Indicators
MACD (12,26,9) shows strengthening bullish momentum, with the histogram expanding since its late July signal-line crossover. However, the KDJ oscillator (14-period) presents divergence as the %K line (89) and %D line (83) hover in overbought territory while price establishes new highs. This negative divergence suggests potential near-term exhaustion, though the MACD's positive trajectory may override short-term corrective signals.
Bollinger Bands
Price has consistently traded above the 20-day Bollinger Band midline since August 1st, with the August 6th close touching the upper band ($214). Bandwidth expanded 48% during the recent surge, indicating strong directional conviction. While the upper band breach suggests overextension, the absence of bearish reversal candles implies continued upside potential before mean reversion occurs.
Volume-Price Relationship
The August 1st breakout occurred on record volume (27.3M shares), providing high-confidence validation of the bullish reversal. Subsequent advances have featured above-average volume, confirming institutional participation. Notably, the July 29th decline occurred on below-average volume, revealing weak conviction that foreshadowed the rally. Current volume profiles support trend sustainability.
Relative Strength Index (RSI)
The 14-day RSI (78) resides in overbought territory, potentially limiting near-term upside. However, this reading remains below February's extreme overbought peak (RSI 88), and momentum-driven stocks can sustain elevated RSI levels during strong trends. Traders should monitor for bearish divergence if price makes marginal new highs while RSI fails to confirm.
Fibonacci Retracement
Applying Fibonacci levels to the February-April decline ($230 → $79), key resistance emerges at the 161.8% extension ($227). The recent consolidation in July found support at the 78.6% retracement ($150), while the current rally faces interim resistance at the 138.2% level ($214). These Fibonacci thresholds align with psychological resistance near the all-time high zone ($220-230).
Confluence and Divergence Observations
Strong confluence exists between the moving average structure, volume confirmation, and MACD bullish alignment, collectively supporting the uptrend. However, bearish divergence appears between price and momentum oscillators (RSI and KDJ), creating tension. The Bollinger Band extension and Fibonacci resistance near $214-$227 may trigger consolidation, but the broader technical structure suggests pullbacks to $198-$200 would represent high-probability buying opportunities before another leg upward.