The Rounded Reversal and Bullish Breakout for LULU

Jan 12, 2016: 11:05 AM CST

Now it’s time for a little good (bullish) news for the market – or at least a particular stock.

Lululemon (LULU) completed a “Saucer” or “Rounded Reversal” price pattern with a bullish breakout.

Let’s see the chart and note the new opportunity and targets:

Price gapped down into a bearish swing in the latter part of 2015 yet a positive momentum divergence at $44.00 per share set the stage for what would later become the “Saucer” or “Rounded Reversal” (arc) pattern that developed.

Price triggered a BUY signal on the breakout above the yellow highlight near $55.00 per share on higher volume.

The temporary stock market crash of 2016 (can we call it that now?) interrupted the breakout but buyers eventually stepped into the stock, triggering today’s gap-up above the 200 day SMA.

We use the 200 day SMA on charts to determine bullish or bearish biases (bullish above; bearish beneath).

Reference the 200 day SMA and the $58.50 per share price as your bull/bear pivot going forward.

A bullish “buy” pathway is available IF shares continue to trade up above the 200 day SMA and above $60.00.

Look toward $66.00 if price continues extending higher, confirming the reversal.

Let’s look at the Weekly Chart and the importance of the current $58.00 per share pivot:

The bullish gap-up from the Rounded Reversal pattern took price into the $60.00 per share level.

That’s the 200 SMA on the Weekly Chart.

In simplest planning terms, a further movement higher allows for a future play toward $68.00.

If $60.00 is the ceiling of resistance, be cautious especially if price breaks back under the 200 day SMA.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “The Rounded Reversal and Bullish Breakout for LULU”

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