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From Euphoria to Caution: How the Hawkish Cut Reset Market Expectations - Sell Off

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Reddit Stock Weekly and Daily Charts Show Diverging Signals. Will RDDT Maintain Its Uptrend or Face a Reversal?

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Reddit (RDDT) Technical Analysis: Momentum Weakens as Overbought Signals Dominate

The stock price of Reddit Inc. (RDDT) has shown remarkable volatility since its IPO, moving within a wide ascending channel and capturing the attention of both institutional and retail traders. However, the recent price movements across multiple timeframes suggest that Reddit may be entering a cooling phase following a strong bullish run earlier this year.

By examining both the daily and weekly charts, it becomes evident that the current setup points to a potential short-term pullback as momentum indicators flash signs of exhaustion. In this analysis, we’ll review Reddit’s MACD, Stochastic RSI, and price pattern structure, alongside key support and resistance levels to understand where the price could head next.

Daily Chart Analysis: Overbought Signals and Weakening Momentum

The daily chart of RDDT reveals a price currently trading around $212.97, after recently attempting to rebound from a short-term base near $200. Despite this rebound, the Stochastic RSI is showing clear signs that the upward momentum might already be overextended, suggesting caution among traders anticipating further gains.

1. Stochastic RSI

The Stochastic RSI on the daily timeframe has entered the overbought zone, indicating that the short-term upward move might be reaching its limit. Historically, whenever the Stoch RSI climbs above the 80–90 range, it tends to precede a local top or at least a period of sideways consolidation.

This implies that RDDT’s recent recovery from around $181 to $225 is likely a technical bounce, not the start of a sustainable new uptrend. With both %K and %D lines above 85 and beginning to flatten, a potential bearish crossover could confirm a short-term reversal if selling pressure increases.

Traders should interpret this as a warning phase, the market has moved into overbought conditions, and without fresh buying catalysts, prices could easily slide back toward the midrange support zone near $200.

2. MACD

On the same daily chart, the MACD (Moving Average Convergence Divergence) remains below the zero line, a signal that the broader trend still leans bearish despite the recent bounce. The MACD histogram is turning positive, but this is largely due to short-term momentum rather than a change in underlying trend strength.

Since the MACD lines are still positioned below the equilibrium level, this positive movement appears to be a temporary countertrend rally rather than a reversal. If the MACD fails to break above zero while the Stoch RSI cools down, the next probable move could be a return to the lower price channel around $181–$185.

3. Chart Pattern

From a structural standpoint, Reddit remains within a broad ascending channel that has defined its movement since mid-2024. The recent rebound appears to be testing the lower midline of that channel, but the pattern also shows a series of lower highs forming since the $250 peak, hinting at a maturing trend.

If the price fails to sustain above the $225 area, it could validate a descending short-term channel within the broader uptrend, signaling a temporary shift in control from buyers to sellers.
In simpler terms, the market is still structurally bullish long-term, but the near-term outlook leans bearish due to weakening momentum indicators.

4. Support and Resistance (Daily Timeframe)

  • Support 1 (S1): $181.29 – immediate support and the midline of the rising channel.

  • Support 2 (S2): $150.00 – technical base formed from the previous consolidation zone.

  • Support 3 (S3): $124.91 – the foundation of Reddit’s 2024 breakout.

  • Resistance 1 (R1): $225.00 – near-term barrier and recent rejection level.

  • Resistance 2 (R2): $250.00 – upper boundary of the summer rally.

  • Resistance 3 (R3): $270.00 – top of the ascending channel, long-term resistance.

The daily analysis suggests that any failure to maintain above $210–$215 could trigger renewed selling toward $181. The overbought Stoch RSI and sub-zero MACD alignment both strengthen this scenario.

Weekly Chart Analysis: Confirmation of Weakening Momentum

Zooming out to the weekly timeframe provides deeper confirmation that Reddit’s bullish phase may be entering a pause or corrective stage. The stock remains within its larger rising channel, but both MACD and Stochastic RSI show clear signs of cooling, aligning with the signals already observed in the daily chart.

1. MACD

On the weekly chart, the MACD line has crossed below the signal line, creating a clear bearish crossover for the first time in several months. The histogram bars have also begun to contract toward the zero level, signaling that momentum has shifted from buyers to sellers.

This crossover typically indicates a medium-term correction phase. Unless there’s a strong reversal in buying volume, Reddit’s stock price may face further downward adjustment, potentially testing lower channel boundaries or key support levels highlighted earlier.

The bearish MACD crossover on the weekly timeframe is a stronger validation than what is seen on the daily chart, as weekly signals carry more weight and often predict extended moves lasting several weeks or months.

2. Stochastic RSI

The Stochastic RSI in the weekly timeframe currently sits near 11, an extremely low level that follows a steep drop from overbought conditions earlier this quarter. This sharp decline implies that Reddit has already completed its distribution phase, where institutional and speculative investors lock in profits after a rapid price appreciation.

While this oversold reading might suggest that a rebound is possible in the coming weeks, the broader context — a bearish MACD crossover and weakening price action, points more toward a temporary stabilization period rather than a quick reversal.

In other words, Reddit may trade sideways to lower for some time before establishing a new base.

3. Chart Pattern

The long-term price structure remains defined by a rising parallel channel, which has guided Reddit’s major movements since its IPO rally. However, the recent rejection at around $240–$250 coincides with the upper boundary of that channel, marking a likely technical ceiling for now.

With prices now drifting toward the midline near $180–$185, this area will act as a critical support zone. A confirmed break below it would indicate a loss of structural strength, opening room for a deeper retracement toward the $150 level.

As long as prices remain inside the channel, Reddit’s overall uptrend remains technically intact, but with momentum fading, the risk of a medium-term correction remains elevated.

Support and Resistance (Weekly Timeframe)

  • Support 1 (S1): $181.29 – middle channel support.

  • Support 2 (S2): $150.00 – base structure of 2024’s consolidation.

  • Support 3 (S3): $124.91 – long-term breakout origin.

  • Resistance 1 (R1): $225.00 – current ceiling where sellers remain active.

  • Resistance 2 (R2): $250.00 – previous high and upper channel rejection point.

  • Resistance 3 (R3): $270.00 – ultimate channel resistance, long-term limit.

Technical Summary: A Market in Transition

When combining both the daily and weekly analyses, the picture becomes clear: Reddit’s bullish momentum is fading, and the stock has entered a transitionary phase between strength and weakness.
The signals from both timeframes align almost perfectly:

  • Daily Stoch RSI overbought → short-term rally losing steam.

  • Weekly MACD crossover → longer-term momentum turning bearish.

  • Price pattern → upper-channel rejection followed by lower highs.

This synchronization across multiple timeframes strengthens the bearish argument. Unless RDDT can reclaim and close decisively above $225, the path of least resistance remains to the downside, with potential testing of $181 or even $150 over the coming weeks.

That said, traders should also note that both Stoch RSI readings (daily and weekly) are moving in opposite momentum zones, overbought on daily but near oversold on weekly. This combination typically suggests that after a short-term decline, the stock could find temporary stabilization before the next major directional move.

Trading Considerations

  • Short-term traders may consider tightening stop-losses or taking partial profits near the $210–$220 region, anticipating a pullback toward $180–$190.

  • Swing traders should wait for confirmation of support strength around $181 before initiating new long positions.

  • Position traders may monitor MACD behavior closely, a flattening histogram and potential bullish crossover on the weekly chart would mark the earliest sign of a new medium-term rally.

Until those conditions emerge, RDDT remains a sell-on-strength market rather than a buy-on-dip candidate.

Final Thoughts

From a purely technical standpoint, Reddit Inc. (RDDT) appears to have entered a corrective cycle following months of upward momentum.

The alignment of overbought readings on the daily chart and the bearish crossover on the weekly MACD both point to slowing bullish momentum and increased downside risk in the near term.

Unless the price can reclaim the $225–$230 region with strong volume confirmation, the technical outlook remains neutral to bearish, with downside targets near $181 and $150.

For traders and analysts tracking RDDT, the coming weeks will likely define whether this correction becomes a healthy consolidation or the beginning of a longer-term trend shift.




Disclaimer:
This article is for educational and informational purposes only and does not constitute financial or investment advice. All technical analyses and opinions expressed are based solely on chart observations and should not be taken as recommendations to buy or sell any securities. Readers are advised to conduct their own research or consult with a licensed financial advisor before making any investment decisions.

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