Lululemon LULU Stretches to Breakout with Trade Targets

Jun 9, 2015: 12:10 PM CST

Yoga active wear company Lululemon (LULU) reported better than expected quarterly revenue this morning, and buyers bounced the stock higher in a breakout event.

Let’s chart the breakout, update our charts, pinpoint key target levels, and plan a strategy from here.

We’ll start with the Daily Chart breakout as a reference:

Shares performed an upward-facing dog rally (that’s a yoga term!) from the October low to the April peak.

During this time, price roughly doubled as buyers flexed their muscles.

However, most of 2015 saw a sideways stretch bind price in a trading range between $60 and $70.

The most recent patter was a small wedge that created a positive momentum divergence into the key support level slightly beneath $60.00 per share.

The reversal candles at support with divergences formed an aggressive – and profitable – bullish bounce setup.

Today we see the earnings news gap the stock above the upper trendline to trigger a breakout impulse.

The simple target would be $70.00 per share which is the prior high.

We can turn now to the Weekly Chart for a broader perspective and better price targeting:

Shares spent 2012 and 2013 within a wide trading range that broke powerfully to the downside in early 2014.

Price tumbled in half during the sell-off, only to end mid-2014 with a lengthy positive divergence.

A breakout in late 2015 carried price to the current level in early 2015.

Ultimately, we’re monitoring the new uptrend (weekly chart) in the context of a sideways trading range (daily chart).

If buyers continue showing their strength, then we can trade up toward $70.00’s resistance high.

If buyers then take shares in another breakout above $70.00’s high, then we can play potentially higher at least toward the $75.00 per share level into the remainder of 2015.

Whatever indicators you’re using – or whatever yoga stretches you may be practicing – be sure to build your trading strategies around these levels and the bullish price trend in motion.

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Corey Rosenbloom, CMT
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2 Responses to “Lululemon LULU Stretches to Breakout with Trade Targets”

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