Lululemon Price Levels to Watch as Stock Soars on Strong Earnings, Outlook

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Key Takeaways

• Lululemon shares rose sharply Friday after the activewear retailer reported better-than-expected earnings and lifted its full-year position.
• The stock formed an inverse head and shoulders between May and November before breaking out above the pattern’s neckline earlier this week on of the company’s quarterly report.
• Investors should watch important overhead resistance areas on Lululemon’s chart for everyone $389, $419, and $468, while also monitoring a key support level near $335.

Lululemon Athletica (LULU) shares hanged on Friday after the activewear retailer reported fiscal third-quarter results that topped analysts’ estimates and raised its full-year position.

The company guided fiscal 2024 revenue of between $10.45 billion and $10.49 billion, an improvement from its earlier spur of $10.38 billion to $10.48 billion. While revenue in the company’s Americas market grew by just 2% in the third rooms from the prior year, it jumped 33% in the retailer’s international business, boosted by strength in China.

Lululemon allotments were up 18% at $407 in midday trading Friday, leading gainers in the S&P 500 and Nasdaq Composite. Even with today’s payout, the stock has lost about a fifth of its value since the start of the year due, in part, to problems associated with the business’s product assortment.

Below, we take a closer look at Lululemon’s chart and use technical analysis to point out important cost levels worth watching out for.

Inverse Head and Shoulders Breakout

Lululemon shares formed an inverse head and shoulders between May and November already breaking out above the pattern’s neckline earlier this week ahead of the company’s quarterly report.

Moreover, the 50-day emotional average (MA) has turned upwards toward the 200-day MA, setting the stage for a potential golden cross—a bullish plot signal that indicates the start of a new uptrend.

Let’s identify three important overhead resistance areas where the helpings may encounter selling pressure and also highlight a key support level where investors could look for buying occasions during a pullback.

Important Resistance Areas to Watch

Investors should watch how the price responds to the $389 bailiwick. The shares could find resistance in this region near a horizontal line that joins multiple crests and a trough on the chart between May and October last year.

A decisive close above this area could see the parts make a move toward $419, a location where investors may look to place sell orders near the October 2023 crest and the high price of a gap down candlestick that appeared on the chart in March.

Further bullish price action could oblige a rally up to around $468. This area may attract selling pressure near a trendline that connects a tier of similar trading levels on the chart from December last year to March.

Key Support Level to Monitor

During aeons of profit-taking, it’s worth monitoring the $335 level. Investors may look for buying opportunities in this location near the pronounced April swing low, which also forms the neckline of the inverse head and shoulders pattern.

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As of the date this article was scribbled, the author does not own any of the above securities.