Zillow Group Surges 5.01% as Bullish Engulfing Pattern Forms Key Support at $81.81 Resistance at $88.34

Candlestick Theory

Zillow Group C (Z) has experienced a 5.01% surge over three consecutive sessions, forming a bullish engulfing pattern as recent highs surpass prior lows. Key support levels are identified at $81.81 (2025-09-02 close) and $81.17 (2025-08-29 low), while resistance clusters near $88.34 (2025-09-05 high) and $87.44 (2025-08-22 close). A potential bearish reversal could emerge if the price fails to hold above $83.5 (2025-08-19 close), which marks a prior trough.

Moving Average Theory

Short-term momentum aligns with the 50-day moving average (~$84.5), which is above the 100-day (~$82.5) and 200-day (~$80.0) averages, suggesting a bullish bias. However, the 100-day MA crossing below the 200-day MA in late August signals a weakening long-term trend. The current price ($87.89) sits above all three averages, indicating a potential continuation of the uptrend, though convergence of the 50-day and 100-day MAs may signal a slowdown.

MACD & KDJ Indicators

The MACD histogram has expanded positively in recent sessions, confirming bullish momentum, while the KDJ oscillator shows K (~85) above D (~78), suggesting overbought conditions. Divergence between the KDJ and price action is noted: while the price has risen sharply, the K line peaked at 90 in mid-August, hinting at potential exhaustion. The RSI (~80) reinforces overbought territory, raising caution about a near-term pullback.

Bollinger Bands

Volatility has expanded, with the 20-day Bollinger Bands widening from $80–$85 to $85–$89. The price currently sits near the upper band ($88.34), historically a high-probability area for mean reversion. A break below the middle band ($87.0) could trigger a test of the lower band ($85.5), where the 200-day MA provides secondary support.

Volume-Price Relationship

Trading volume has surged during the recent rally, peaking at $247.66 million on 2025-09-05, validating the strength of the upward move. However, volume has declined in the last two sessions despite price gains, suggesting waning conviction. A sustained volume contraction below $150 million may indicate a lack of follow-through, increasing the risk of a reversal.

Relative Strength Index (RSI)

The RSI (~80) confirms overbought conditions, with a historical tendency for corrections after reaching this level. A drop below 60 would signal weakening momentum, while a rejection above 85 may prolong the uptrend. Caution is warranted given the recent divergence between RSI peaks and price highs.

Fibonacci Retracement

Key retracement levels from the August 2025 low ($60) to the September 2025 high ($88.34) include 38.2% ($78.5) and 50% ($74.2). The price has tested the 61.8% level ($70.0) in prior corrections but remains well above it. A breakdown below $83.5 (38.2% retracement) could target $81.5, aligning with recent support zones.

Backtest Hypothesis

A backtest strategy could involve entering long positions when the price crosses above the 50-day MA and the RSI exceeds 50, with a stop-loss below the 200-day MA. A Fibonacci retracement-based approach might target 38.2% ($78.5) as a buy zone during pullbacks. Exit signals could be triggered by a MACD crossover below the signal line or RSI dropping below 50. Historical data from 2024–2025 shows mixed success in such scenarios, with stronger performance during periods of rising volume and narrowing Bollinger Bands.