Rocket Companies (RKT) Plunges 3.49% as Bearish Engulfing Pattern Forms Testing Key Support at $19.165–$19.37

Rocket Companies (RKT) fell 3.49% in the most recent session, marking a significant bearish reversal after a prior 3.56% rally. This sharp decline, coupled with a lower close near the session’s low, suggests a potential bearish engulfing pattern, signaling short-term weakness. Key support levels appear to form around $19.165–$19.37, with resistance clustering near $20.06–$20.27. The price action indicates a breakdown from a recent consolidation range, increasing the likelihood of a test of the next support at $18.71–$18.88 if the downward momentum persists.
Candlestick Theory
The recent price action forms a bearish engulfing pattern, where the bearish candle (3.49% drop) engulfs the preceding bullish candle (3.56% gain). This pattern, combined with a closing price near the session’s low, underscores strong selling pressure. Key support levels at $19.165–$19.37 are critical for near-term stability, while resistance at $20.06–$20.27 appears to have failed as a short-term ceiling. A break below $19.165 could trigger a deeper correction toward $18.71, identified as a prior support-turned-resistance level.
Moving Average Theory
The 50-day moving average (approximately $19.00–$19.20) currently sits below the 200-day moving average (~$17.50–$17.70), forming a bearish "death cross" configuration. The 100-day MA (~$18.50) further reinforces the downtrend. Prices trading below the 50-day MA suggest short-term bearish bias, while the 200-day MA indicates a longer-term bearish trend. A retest of the 50-day MA could offer a potential entry point if a bounce occurs, but a sustained break below the 200-day MA would likely accelerate the decline.
MACD & KDJ Indicators
The MACD histogram has turned negative, with the line crossing below the signal line, confirming bearish momentum. The KDJ (Stochastic) oscillator shows the %K line dipping below 20, entering oversold territory, while %D lags behind, suggesting potential for a short-term rebound. However, the divergence between the oversold KDJ and the MACD’s bearish trend indicates caution—momentum indicators may signal a bounce, but the broader trend remains downward. A failure to rebound above the 50-day MA could negate the KDJ’s oversold signal.
Bollinger Bands
Volatility has expanded recently, with the Bollinger Bands widening as the price nears the lower band (~$19.10–$19.30). This contraction-expansion pattern suggests heightened volatility and potential for a breakout or breakdown. The price’s proximity to the lower band aligns with the bearish engulfing pattern, increasing the probability of a continuation lower. A sustained move above the upper band (~$20.00–$20.20) would require a reversal in momentum, which appears unlikely given current indicators.
Volume-Price Relationship
Trading volume spiked on the recent 3.56% rally (38.2 million shares) but declined to 17.3 million shares during the subsequent 3.49% drop. While the bearish move occurred on lower volume, it still validates the breakdown from the consolidation range. However, the muted volume suggests waning conviction in the downtrend. A significant increase in volume on a follow-through sell-off would confirm sustainability, whereas a lack of volume could indicate exhaustion.
Relative Strength Index (RSI)
The RSI has dipped into oversold territory (~28–30), suggesting potential for a short-term rebound. However, given the broader bearish trend, this oversold reading is more indicative of a temporary pause than a reversal. A closing above $19.50 could push RSI above 30, but a failure to hold above $19.36 would likely keep RSI depressed, reinforcing the downtrend.
Fibonacci Retracement
Key Fibonacci levels derived from the $10.40–$21.50 swing range include 38.2% ($16.20), 50% ($15.75), and 61.8% ($14.30). The current price of ~$19.36 aligns with the 78.6% retracement level, acting as a potential short-term support. A break below this level would target the 88.6% retracement (~$13.20), though immediate support at $18.71–$18.88 is more relevant in the near term.
Confluence and Divergences
Confluence between the bearish engulfing pattern, MACD divergence, and Fibonacci support at $18.71 suggests a high probability of further decline if the price breaks below $19.165. However, the KDJ’s oversold condition and RSI’s proximity to 30 introduce a potential divergence, hinting at a temporary bounce. Traders should monitor volume and the 50-day MA for confirmation of trend continuation or reversal.