Rocket Companies Surges 18.07% on Bullish Candlestick Patterns and Golden Cross, Eyes Key Fibonacci Support

Candlestick Theory

Rocket Companies (RKT) has experienced a three-day upward trend, with a 18.07% surge in the past three sessions, indicating strong bullish momentum. Recent candlestick patterns, such as the "Bullish Engulfing" and "Higher High/Higher Low" formations, suggest a continuation of the uptrend. Key support levels are evident around $17.15–$17.42 (previous lows from mid-August to early September), while resistance is clustered at $19.15–$20.47 (recent highs). The price action shows a series of strong white candles with long lower shadows, signaling buying pressure. However, a potential bearish reversal could emerge if the price fails to hold above $17.88 (a prior intraday low on September 3), which may trigger a retest of the support zone.

Moving Average Theory

The 50-day moving average (DMA) is positioned above the 200-day DMA, forming a "Golden Cross" that confirms a medium-term bullish trend. The 100-day DMA is also rising, aligning with the 50-day and 200-day lines to reinforce the uptrend. Short-term momentum is supported by the 50-day DMA crossing above the 100-day DMA in late August, indicating accelerating buying interest. However, a divergence between the 50-day and 100-day DMAs (if the 50-day flattens while the 100-day continues upward) could signal weakening momentum. The current price of $20.26 sits comfortably above all three moving averages, suggesting a strong continuation bias.

MACD & KDJ Indicators

The MACD histogram has shown positive divergence, with increasing bullish momentum as the price surges. The MACD line crossing above the signal line on September 5 confirms a short-term bullish signal. Meanwhile, the KDJ stochastic oscillator has entered overbought territory (K-line above 80), suggesting potential exhaustion in the uptrend. However, the D-line remains above 50, indicating that the trend retains strength. A bearish crossover in KDJ (K-line dipping below D-line) could trigger a pullback to test the $19.15–$19.62 range. Divergence between the MACD and price action (e.g., a narrowing histogram amid rising highs) may foreshadow a correction.

Bollinger Bands

Bollinger Bands have expanded significantly, reflecting heightened volatility following the recent rally. The price has remained above the upper band since mid-August, signaling strong momentum. A contraction in band width during late July to early August preceded the breakout, acting as a "calm before the storm." The current position near the upper band suggests continuation potential, but a breakdown below the middle band ($19.62–$19.15) could trigger a retest of the lower band ($17.15–$17.62).

Volume-Price Relationship

Trading volume has surged during the recent rally, peaking at 39.3 million shares on September 5, validating the strength of the price action. The volume profile shows a healthy increase in buying interest during up days, with declining volume on pullbacks (e.g., the September 2 decline). However, if volume begins to wane during upward moves while the price continues to rise, it may indicate weakening conviction. The volume-price divergence observed on August 29 (declining volume amid a 3.43% drop) suggests caution for potential reversals.

Relative Strength Index (RSI)

The 14-day RSI is currently above 70, indicating overbought conditions and a potential short-term pullback. Historical data shows the RSI has frequently tested the 70–80 threshold since late August, with the price resuming the uptrend after brief corrections. A drop below 50 would signal a bearish shift, but the current context suggests a "higher highs, higher lows" pattern may keep RSI elevated. Caution is warranted if RSI fails to retest 70 on a rally, as this could indicate a loss of momentum.

Fibonacci Retracement

Key Fibonacci levels derived from the July 23 ($16.21) to September 5 ($20.26) rally include 38.2% at $18.95 and 61.8% at $17.88. The price has already tested the 61.8% level on September 3, finding support. A breakdown below $17.88 may target the 78.6% retracement at $17.15, aligning with the key support zone identified in candlestick analysis. Conversely, a breach of the $20.47 high on September 5 would extend the rally toward the $21.50–$22.00 Fibonacci extension levels.

Backtest Hypothesis

A backtesting strategy could integrate the confluence of moving averages, RSI, and volume signals. For example, a long entry could be triggered when the 50-day DMA crosses above the 200-day DMA (Golden Cross), RSI is above 50, and volume surges by 20%+ relative to the 20-day average. A stop-loss could be placed below the 61.8% Fibonacci level ($17.88), while a take-profit target aligns with the upper Bollinger Band or 127.2% Fibonacci extension. Historical data from July to August shows such a strategy would have captured the August 22–September 5 rally but would have required filtering out false signals during volatile periods (e.g., mid-August declines).