The Trade Desk Surges 5.15% on Two-Day Rally Amid MACD Golden Cross and RSI Overbought Signals

The Trade Desk (TTD) has surged 5.15% on the most recent session, marking a two-day rally with a cumulative gain of 6.01%. The stock closed at $55.36, with a high of $55.56 and a low of $52.67, indicating a bullish bias in recent price action. This momentum follows a period of consolidation and volatility, particularly evident in late July and early August when the stock experienced sharp swings, including a -38.61% drop on August 8, followed by a rapid rebound. The current price level suggests a potential breakout from a descending channel, with key support levels forming around $52.65 (August 27 close) and $50.76 (August 14 close).

Candlestick Theory

Recent candlestick patterns suggest a continuation of the bullish trend. A bullish engulfing pattern formed on August 28, with the body of the candle fully encompassing the previous day’s bearish candle. Additionally, the price has tested the upper boundary of a descending channel multiple times, most recently on August 28, without breaking below the channel’s lower support. This confluence of patterns and structure implies that buyers are maintaining control, though a breakdown below $52.65 could trigger a retest of deeper support levels near $50.76.

Moving Average Theory

The 50-day moving average (approximately $65.00) is significantly above the 200-day moving average (around $80.00), indicating a long-term bearish bias despite recent short-term strength. However, the 50-day line has started to flatten, suggesting potential exhaustion in the downtrend. The 100-day moving average (around $67.50) currently acts as a dynamic resistance level. If the stock closes above this threshold, it could signal a shift in momentum toward a bullish crossover scenario. Conversely, a sustained close below the 200-day average would reinforce bearish sentiment.

MACD & KDJ Indicators

The MACD line has crossed above the signal line, forming a golden cross that aligns with the recent price rally. This suggests strengthening momentum in the short term. The KDJ oscillator, however, shows mixed signals: while the %K line has entered overbought territory (>80), the %D line remains neutral, indicating potential divergence. This discrepancy may hint at a temporary overbought condition without immediate reversal signals. Traders should monitor for a bearish crossover in the KDJ to confirm potential exhaustion in the rally.

Bollinger Bands

Volatility has expanded recently, with the bands widening to reflect the sharp price action. The current close of $55.36 sits near the upper Bollinger Band, a position often associated with continuation in strong trends. However, the upper band’s slope has flattened, which could signal a potential pause in the upward move. A retest of the lower band ($51.50) would provide a clearer picture of whether the trend remains intact.

Volume-Price Relationship

Trading volume has surged on the recent rally, with the August 28 session recording 12.37 million shares traded—the highest volume since late July. This volume confirms the sustainability of the upward move, as it aligns with the price break above key resistance. However, a declining volume profile on subsequent days may indicate waning buying pressure, suggesting caution for further upside without a significant increase in liquidity.

Relative Strength Index (RSI)

The 14-day RSI has entered overbought territory, currently at 72, reflecting aggressive buying. While this is a cautionary signal, historical data shows that the stock has frequently traded in overbought conditions during sharp rallies, often without immediate correction. A sustained close below 50 would validate a bearish reversal, but traders should note that overbought levels in trending markets can persist for extended periods.

Fibonacci Retracement

Key Fibonacci levels derived from the July 17 high ($81.44) and the August 8 low ($50.21) include 61.8% at $62.20 and 78.6% at $67.30. The current price of $55.36 is below the 50% retracement level ($65.82), suggesting that the stock remains in a corrective phase. A breakout above $62.20 could trigger a retest of the 78.6% level, but a failure to hold above $55.56 may reinforce the bearish Fibonacci bias.

Backtest Hypothesis

A hypothetical backtest strategy could integrate the confluence of MACD crossovers, RSI overbought conditions, and Fibonacci retracement levels to identify high-probability entry and exit points. For example, a long entry might be triggered when the MACD line crosses above the signal line, the RSI dips below 70, and the price holds above a key Fibonacci level (e.g., 61.8%). Stops could be placed below the nearest support level (e.g., $52.65), with targets aligned with the 78.6% Fibonacci level. Historical data suggests that such a strategy would have captured parts of the July-August volatility but would require further refinement to account for false signals during sharp corrections like the August 8 selloff.