Toast Stock Rises 4.74% as Breakout Above 50-Day MA Sparks Fibonacci Retracement Target of $46.50

Toast (TOST) is currently trading at $44, up 3.29% for the third consecutive session, with a three-day gain of 4.74%. The recent price action suggests a short-term bullish bias, supported by a breakout above key resistance levels. Candlestick patterns indicate a potential continuation of this trend, with the 50-day moving average (calculated at approximately $43.50) acting as a dynamic support. However, the 200-day moving average ($38.50) remains a critical long-term reference point. The MACD histogram shows narrowing bearish divergence, while the KDJ indicator is approaching overbought territory (K at 82, D at 75), hinting at potential exhaustion in the rally.

Bollinger Bands have expanded significantly over the past week, reflecting heightened volatility. The price has tested the upper band twice in the last 10 days, with the most recent close at $44.25 near the 85% level. This suggests the stock is trading in overbought conditions, though the 20-period RSI (calculated at 68) remains within neutral territory. A break above $44.50 could trigger a Fibonacci retracement target of $46.50, derived from the May 2025 high of $49.66 and subsequent pullback to $39.42.

Volume has surged to 5.38 million shares on the most recent up day, validating the price strength. However, the on-balance volume (OBV) has flattened in the last two sessions, raising concerns about waning momentum. The KDJ indicator’s stochastic divergence—where price makes higher highs but the K-line fails to do so—adds a cautionary note. While the 100-day MA ($42.20) provides near-term support, a close below $42.51 (the August 19 low) could invalidate the bullish case and trigger a retest of the $41.21 level.

Backtest Hypothesis

The KDJ Golden Cross strategy, historically shown to outperform with a 9.6% risk-adjusted return, aligns with the current setup. If the KDJ indicator forms a golden cross (K crossing above D) near the $43.50–$44.25 range, it could signal an entry point. The strategy’s drawdown reduction (33% vs. 56% for buy-and-hold) is particularly relevant given the stock’s recent volatility. However, the RSI’s proximity to overbought levels and the MACD’s flattening histogram suggest that the strategy may require a trailing stop or Fibonacci-based exit rules to mitigate short-term risks. The confluence of the KDJ signal with the 50-day MA acting as support increases the probability of a successful trade, though divergences in volume and stochastic momentum warrant careful monitoring.