RDDT: Bullish Bias, but the Previous Rejection Holds the KeyReddit, Inc. Class ABATS:RDDTheavydiligenceReddit operates a community-based social platform within the communication services sector, generating most of its revenue through advertising. Its investment story depends on turning a large, engaged audience into sustained revenue and earnings growth. For this idea, my focus is narrower: a potential short-term bullish swing, provided price confirms the setup. There is a fundamental basis for keeping RDDT on the bullish watchlist. Second-quarter revenue increased 61% year over year to $805 million, advertising revenue grew 64%, and daily active uniques reached 130.3 million, up 18%. Reddit also reported $253 million in net income. Management’s third-quarter outlook called for revenue of $860–$870 million and adjusted EBITDA of $385–$395 million. Those are company projections, not reported third-quarter results. The challenge is what investors expect next. Strong growth does not guarantee a rising share price, especially if expectations have already moved ahead of the business. U.S. daily active users declined sequentially in the second quarter, a reminder that monetization strength and audience growth do not always move together. Future guidance and evidence that growth remains durable deserve close attention. That backdrop supports investigating a long setup. The chart still needs to provide the entry. On the hourly chart, RDDT has advanced from the upper $140s into the low $160s, establishing a rising structure before encountering rejection. With price shown near $159.75, the immediate question is whether this becomes a constructive retracement or the beginning of a failed recovery. I currently give the bullish scenario more weight, but I do not know how deep the retracement will be. Trying to guess the exact bottom is not the objective. I want to see where buyers respond, how the recovery develops, and whether price can break back above the previous rejection. Green: A Pullback That Sets Up Continuation The first areas I am watching beneath price are approximately $158–$159 and $156–$157. These are decision zones on the chart, not guarantees that buyers will defend them. A pullback into either area can remain constructive if selling slows, support develops, and the subsequent recovery begins repairing the structure. The more important test is overhead. The rejection zone around $161–$162, together with the nearby swing high, is where buyers need to demonstrate renewed control. A push into that area followed by another rejection would leave the setup unfinished. What interests me is a break back above the previous rejection after the retracement, with price showing that the reclaim can hold. A wick above resistance is weaker evidence than a close through it followed by constructive trading. If a new rejection forms during the recovery, that level also becomes relevant to the entry decision. That is where I would consider calls for a shorter-term swing. I want the continuation portion of the move once the structure supports it. I am not looking to buy simply because price has pulled back, and a gap higher would not obligate me to chase. If the breakout establishes support, the green path illustrates potential expansion through the mid-to-upper $160s and eventually toward approximately $174–$176. Those are scenario reference areas rather than independently confirmed resistance levels. Price would need to earn each extension through continued strength. A breakout that immediately loses the reclaimed zone would weaken the setup. Repeated failures, lower highs, or a sustained loss of the pullback low would require reassessment. A bullish preference cannot substitute for buyers actually defending the structure. Red: The Recovery Fails The bearish alternative deserves a place on the chart even though it is not the trade I am looking to take. If RDDT loses the nearby support zones and cannot reclaim them, attention shifts toward approximately $150–$152, followed by the $147–$148 area and $146. Continued deterioration could bring price back toward the descending daily trend line shown beneath the hourly structure. That trend line is dynamic. Its price changes with time, so the low-to-mid $140s shown along the projected path should be treated as an approximate area, not a fixed destination. The evidence for Red would be persistent trading below support, lower highs, and failed recovery attempts. A brief flush that buyers quickly reclaim would carry a different message from a breakdown that continues finding sellers on every bounce. There may be a legitimate bearish trade in that sequence. My interest here remains on the bullish side. If the long setup fails to develop, I can leave it alone rather than force a trade in the opposite direction. The Scenario That Is Not Drawn I have not included my usual yellow path, but consolidation remains possible. RDDT could spend several sessions moving between support and the previous rejection without establishing a durable direction. That would matter particularly for calls: the stock can avoid breaking down while an option still loses value through time decay or changing implied volatility. Leaving Yellow off the chart does not remove that risk. If price stays trapped in overlapping candles and repeated failed breakouts, patience remains part of the plan. What Could Change the Setup The broader market matters this week. CPI is scheduled for Wednesday, October 14, at 8:30 a.m. ET, followed by PPI on Thursday, October 15, at 8:30 a.m. ET. Thursday also brings retail sales and jobless claims. These releases can change market conditions before the regular session begins. A favorable RDDT chart can still struggle if yields rise sharply and growth stocks lose support. Conversely, a resilient market could help a confirmed breakout develop. I will be watching whether RDDT holds its own support during broader-market pullbacks and whether it participates when conditions improve. The intended holding period is a short-term swing. Extending that into an earnings hold would be a separate decision requiring a fresh review of the event, option pricing, and risk. For now, the plan is straightforward: let the retracement develop, identify the recovery structure, and watch for a confirmed break back above the previous rejection. Calls are the setup I am interested in evaluating if those conditions appear. Until then, this remains a watchlist idea.