Reddit Stock Plunges 7.81% Amid Three-Day 12.29% Slide

Reddit (RDDT) experienced significant bearish momentum in the most recent session, declining 7.81% to close at $237.45. This marks the third consecutive daily loss, accumulating a 12.29% drop over this period. The stock retreated from an intraday high of $255.78 to a low of $235.85, reflecting persistent selling pressure. This short-term weakness forms the backdrop for our technical analysis of the stock’s trajectory.
Candlestick Theory
Recent sessions reveal critical bearish patterns. The September 19–23 period formed three consecutive long red candles, confirming a Three Black Crows pattern near the $270 psychological resistance. This signals exhaustion after the September 10 bullish surge (+7.84%) and suggests distribution. The $255–$260 zone now acts as formidable resistance, while the $235–$230 range aligns with June swing highs to offer immediate support. A breakdown below $235 could trigger further declines toward $220.
Moving Average Theory
Reddit’s moving averages depict a deteriorating trend structure. The 50-day MA (approximated at ~$220) has crossed below the 100-day MA (~$230), confirming a death cross and amplifying intermediate-term bearish pressure. The price now trades well below all key MAs (50/100/200-day), with the 200-day MA (~$190) acting as a distant safety net. This configuration suggests entrenched bearish momentum, and any recovery would need to reclaim the $255–$260 confluence zone where the 100-day MA and recent resistance converge.
MACD & KDJ Indicators
MACD shows accelerating bearish momentum, with the histogram deepening below the signal line and both trending negative. This aligns with the KDJ oscillator, where the %K line (22) and %D line (28) are entrenched below the 20 oversold threshold. While KDJ’s persistent oversold reading warns of potential mean reversion, bearish MACD divergence in late August (price highs not confirmed by momentum) preceded the current selloff. This synchronicity between MACD and KDJ suggests oversold conditions lack immediate reversal catalysts without supportive volume or price patterns.
Bollinger Bands
Volatility expansion is evident as Reddit breached the lower Bollinger Band ($245) on September 23, signaling an oversold extreme. The bands widened sharply during the selloff, reflecting elevated fear. Historically, such deviations often precede tactical bounces, but the lack of bullish reversal candles near the band warns against premature longs. The mid-Band ($260) now serves as dynamic resistance, while a sustained close below the lower band would signal intensified downtrend momentum.
Volume-Price Relationship
Volume trends validate the bearish breakdown. The September 19–23 decline occurred on increasing volume (11.5M, 5.3M, and 8.0M shares), confirming distribution. Notably, the September 10 rally (+7.84%) saw lower volume (7.4M) than the subsequent down days, undermining its sustainability. The highest recent volume accompanied the August 1 breakout (+17.47%, 27.3M shares), making the $190–$195 zone a high-conviction support area due to historic accumulation.
Relative Strength Index (RSI)
RSI (14-period) sits at 28, deeply oversold and matching July lows that preceded bounces. However, it has failed to hold above 30 during the current downturn, reflecting sustained selling pressure. Bearish divergence emerged in late August when RSI peaked at 65 while prices set higher highs, foreshadowing weakness. While oversold conditions suggest downside exhaustion is possible, RSI can remain depressed in strong downtrends, necessitating confirmation from price action or volume shifts.
Fibonacci Retracement
Applying Fibonacci to the swing low of $65.92 (September 30, 2024) and the all-time high of $270.71 (September 18, 2025), key retracement levels emerge. The 38.2% level ($189) aligns with the 200-day MA and the August 5 consolidation zone. The 50% retracement ($168) coincides with the June–July base, and the 61.8% level ($147) matches the May breakout point. Current price action is testing the 23.6% retracement ($237), a pivotal short-term support. A breach here opens the path toward the 38.2% level, where historical volume concentrations may trigger stabilization.
Confluence and Divergence Observations
Confluence exists between oversold signals (RSI ≈28, KDJ <30, and Bollinger Band breach) and the Fibonacci 23.6% support ($237), hinting at near-term stabilization potential. However, dominant bearish consensus arises from the moving average death cross, volume-backed distribution patterns, and MACD momentum confirmation. A critical divergence is noted between RSI/KDJ oversold extremes and unresolved price deterioration, suggesting sentiment remains fragile despite stretched indicators. For a durable reversal, Reddit must reclaim the $255–$260 resistance cluster (50/100-day MA convergence + recent breakdown point) with supportive volume. Until then, probabilistic downside targets include the $220 psychological level and the $189–$195 high-volume support zone.