Lululemon Athletica (LULU) shares experienced a boost in premarket trading on Friday following the activewear retailer’s announcement of higher-than-expected profit and plans to accelerate the introduction of new products. These positive developments helped offset weak sales and a cut to the company’s full-year outlook. As a result, investors are now closely monitoring the stock’s performance and key price levels on the Lululemon chart.
Descending Channel Breakout Test
Since late March, Lululemon shares have been trading within a descending channel, which has kept the price in a multi-month downtrend. Despite a pre-earnings rally earlier this week, the stock encountered resistance near the top trendline of the channel and the 50-day moving average. However, the premarket move suggests a potential retest of this area on Friday.
Key Lululemon Chart Levels to Watch
Following the quarterly report, investors should pay attention to four key chart areas, three of which align closely with Fibonacci retracement levels when applying a grid from the December high to the August low.
The projected open on Friday is expected to test the $272 area, where the price is likely to face selling pressure near the descending channel’s top trendline and the downward sloping 50-day moving average. A decisive breakout above this level could lead to a rally towards $293, which is roughly the same area as the 23.6% Fibonacci retracement level. This level may also encounter resistance near the May low, which corresponds to several trading levels in July.
If buying pressure continues, the stock could move up to the $335 region, just below the 38.2% Fibonacci retracement level. This area may attract selling interest due to the prominent swing low in April and the swing high in early June.
In the long term, an uptrend could result in a retest of the key 50% Fibonacci retracement level at $371. This level is also where the shares may encounter investors looking to take profits near the countertrend peak in April, which is positioned towards the top of the descending channel.
Conclusion
Lululemon Athletica’s shares have seen a significant decline since reaching a record high in December. However, the recent positive earnings report and plans to introduce new products have provided some relief to investors. The stock’s premarket move suggests a potential retest of the top trendline of the descending channel and the 50-day moving average. Investors should closely monitor post-earnings price levels at $272, $293, $335, and $371.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as investment advice. The author does not own any of the securities mentioned.
