Rocket Lab Gains 23.32% in Three Days as Technical Indicators Signal Strong Bullish Momentum

Rocket Lab (RKLB) has surged 10.10% in the most recent session, extending a three-day rally with a cumulative gain of 23.32%. The price action reflects strong bullish momentum, with recent highs reaching $86.25 and lows at $74.05, forming a potential ascending triangle pattern. Key support levels emerge around $71.31 (prior intraday low) and $69.76 (December 31 close), while resistance aligns with the recent high of $86.25. A break above $86.25 could target the next psychological level at $90, whereas a retest of $71.31 may confirm its robustness.

Candlestick Theory

The recent three-day rally features large bullish bodies and limited lower shadows, suggesting aggressive buying. A potential "three white soldiers" pattern is forming, though confirmation requires a close above the previous session’s high. The $74.05 level (January 6 low) acts as a dynamic support, with a breakdown below $71.31 potentially invalidating the bullish bias.

Moving Average Theory

The 50-day moving average (approximately $67.50) and 200-day MA (around $47.00) show a steep upward slope, confirming a multi-month uptrend. The 100-day MA ($58.50) has been crossed above by the 50-day MA, reinforcing bullish momentum. Price remains well above all three averages, indicating a strong trend. A close below the 50-day MA would trigger a reevaluation of the trend’s sustainability.

MACD & KDJ Indicators

The MACD histogram has expanded into positive territory, with the line above the signal line, suggesting accelerating bullish momentum. The KDJ (Stochastic) indicator shows the %K line at 85 and %D at 78, entering overbought territory. While this may indicate a potential pullback, the divergence between the RSI and KDJ (discussed below) suggests caution—overbought conditions may persist if volume remains robust.

Bollinger Bands

Volatility has spiked, with the upper band near $88.50 and the lower band at $68.50. Price currently sits near the upper band, suggesting overbought conditions. A reversion toward the 20-day moving average ($75.50) could signal consolidation, but a sustained break above the upper band would validate continued expansion.

Volume-Price Relationship

Trading volume has surged during the rally, with the January 6 session recording $3.55 billion in turnover. This validates the price increase, as volume aligns with the directional move. However, a deceleration in volume during follow-through rallies could signal waning momentum, warranting a reassessment of the trend.

Relative Strength Index (RSI)

The 14-day RSI stands at 72, nearing overbought territory. While this does not necessarily signal an immediate reversal (especially in strong trends), a failure to surpass 75 followed by a close below 65 may indicate a pullback. Divergence between RSI and price (e.g., lower highs in RSI despite higher price highs) would heighten caution.

Fibonacci Retracement

Applying Fibonacci levels from the December 31 low ($69.76) to the January 6 high ($86.25) identifies key retracement levels at $76.90 (38.2%), $73.40 (50%), and $70.70 (61.8%). A retest of the 50% level ($73.40) could act as a pivot point—holding above this would reinforce the bullish case.

Confluence and Divergences

Strong alignment exists between the bullish moving averages, expanding MACD, and robust volume, supporting a continuation. However, the overbought RSI and KDJ suggest caution, as momentum may not sustain indefinitely. Divergence between RSI and price (if observed) could foreshadow a correction.

Probabilistic Outlook
The confluence of bullish technicals suggests a higher probability of the uptrend continuing in the short term, with $86.25–$90 as the next target. However, overbought conditions and potential momentum exhaustion imply a 30–40% chance of a pullback to test $73.40–$71.31 before resuming higher. Traders should monitor volume during pullbacks and watch for a breakdown below the 50-day MA as a bearish signal.