Rocket Lab Gains 6.86% as Two-Day Rally Hits 9.07% on Technical Momentum

Rocket Lab (RKLB) has surged 6.86% in the most recent session, extending a two-day rally of 9.07%. The price action suggests short-term bullish momentum, but a comprehensive analysis of technical indicators is required to assess the sustainability and potential reversal points.

Candlestick Theory

Recent price action forms a bullish continuation pattern, with the current close near the upper shadow of the preceding candle. Key support levels are identified at $40.22 (August 21 low) and $38.26 (August 20 low), while resistance is clustered near $44.68 (August 22 high). A breakdown below $40.22 could trigger further retracement toward $38.26, whereas a breakout above $44.68 may target $45.16 (August 19 high). The formation of a “higher high, higher low” structure since mid-August indicates a potential bullish trend continuation, though bearish divergence in the RSI (discussed later) may challenge this outlook.

Moving Average Theory

The 50-day moving average (approximately $44.00) is above the 200-day MA ($39.00), suggesting a short-term bullish bias. The 100-day MA ($43.50) aligns with the 50-day MA, reinforcing the upward trend. However, the 200-day MA provides critical support; a close below $43.50 may signal a shift in medium-term sentiment. The current price of $44.38 sits above all three moving averages, indicating a healthy uptrend, but narrowing spreads between the 50- and 200-day MAs hint at potential consolidation ahead.

MACD & KDJ Indicators

The MACD histogram has expanded positively, with the MACD line (12-period) above the signal line (26-period), confirming bullish momentum. However, the KDJ indicator shows overbought conditions, with the %K line (14-period) at 85 and %D at 78, suggesting a potential near-term correction. While the MACD supports continuation, the KDJ divergence (price rising while %K peaks) may foreshadow a pullback. The confluence of overbought momentum and narrowing Bollinger Bands (discussed next) increases the probability of a short-term reversal.

Bollinger Bands

Volatility has expanded recently, with the price testing the upper band at $44.68. The 20-period Bollinger Band width is at its widest level in three months, indicating a potential exhaustion of the rally. A reversion toward the 20-period SMA ($43.90) is likely, with the lower band at $42.30 acting as a probable support. Band contraction observed in late July (narrowest width on July 21) preceded a sharp rebound, suggesting similar dynamics may unfold here.

Volume-Price Relationship

Trading volume has surged to $822.76 million, a 33% increase from the prior session, validating the recent price strength. However, volume has not exceeded the August 13–14 range ($1.01 billion), which coincided with a 9% rally. While the current volume supports the bullish narrative, a failure to sustain high volume during further gains may signal weakening conviction. The 50-day volume average is 24.1 million shares, below the current 18.8 million, suggesting distribution is not yet aggressive.

Relative Strength Index (RSI)

The 14-period RSI has crossed into overbought territory at 72, aligning with the KDJ overbought signal. Historical data shows the RSI peaked at 80 on August 13 before a 9% correction, indicating a potential exhaustion level. However, the RSI has not yet formed a bearish divergence (price higher while RSI lower), so the overbought condition remains a warning rather than a reversal signal. A close below 60 would trigger a sell-off, but caution is warranted given the backtest results (see below).

Fibonacci Retracement

Applying Fibonacci levels to the recent $38.26–$44.68 range, the 50% retracement level at $41.47 is critical. The 38.2% level at $42.75 is already in play as support, with the 61.8% level at $43.61 acting as a near-term target. A breakdown below $41.47 would validate a deeper correction toward the 78.6% level at $38.60. The current price of $44.38 sits just below the 76% retracement level, suggesting the rally may be nearing exhaustion.

Backtest Hypothesis

The backtest of a strategy buying Rocket Lab when RSI exceeds 70 and selling when it falls below 70 (2022–present) yielded poor performance. For instance, buying on November 21, 2022 (RSI ~70, price $5.46) would have coincided with a peak, leading to a 30% decline by December 19. Conversely, selling at RSI 70 failed to capture sustained rallies, as seen in late July 2025 when RSI peaked at 80 but the price continued rising. This highlights the RSI’s limitations in trending markets and the necessity of combining it with volume and moving average confluence.