Eli Lilly and Company (NYSE:LLY) technical analysis: Which way the stock is headed?

Eli Lilly and Company (NYSE:LLY) gained 0.79% in yesterday’s session, going up from its prior closing price of $86.96 to $87.65, and has now recorded rally in 8 consecutive sessions. It is uncommon for a stock to keep rising for so many consecutive days so a temporary pullback is likely. The stock price went upward in 9 of the last 10 days and has generated 5.18% during the last two weeks. The upbeat movement of both volume and price during the recent session is interpreted as a good sign, and, overall 2.91 million more shares exchanged hands compared with prior day. In total, 5.22 M shares exchanged hands for about $457.46 million.

Inside LLY’s Recent Trend

Eli Lilly and Company (LLY) has broken the wide and horizontal trend up. Breaks like this are often followed by swift and strong movements, and any correction down to the breakline at approximately. $85.79 is considered to be a second chance to hit a potential runner. It is, however, important that volume does follow the price as false breaks may appear and it may move back into the horizontal trend. Based on the rectangle-formation theory the stock is predicted to reach $93.87 sometime over the course of a quarter.

Eli Lilly and Company Technical Signals

LLY has witnessed its long term and short term MA triggering a buy signal. Many traders watch for short-term averages to cross above long-term averages to signal the beginning of a uptrend. Upon corrections, the price will meet support from the averages between $86.09 and $81.94. A break down through these support points will trigger sell signals. Its pivot point low generated buy signal on Tuesday September 19, 2017, which calls for additional surge until the stock forms a new pivot point high. There was increase in both volume and price. This is usually interpreted as a good sign as traders widely believe rising stock should see increasing volume.

Eli Lilly and Company (NYSE:LLY) Support And Resistance Levels

In case of pullback, the next support the price will capture from accumulated volume will not be far away from current price at $82.19 and $81.84. It seems to be blessed by the accumulated volume as it meets no resistance above current level and favorable trading conditions will help the stock to show strong performance in the coming days.

It is important to note, however, that the stock needs to make its way through natural risk while testing a key support level. Once this support is broken, another support level will be to be established at a lower level. Turning back to this stock, Eli Lilly and Company approaches the first support point just current price at $82.19. In case of a break, the next support we will see from accumulated volume is going to be at $81.84 and $77.80.

Eli Lilly and Company (LLY) Risk Assessment

The number of shares changed hands in the stock is good, indicating the interest and low risk associated with it. In the most recent session, the stock price hovered around $2.70 (3.13%) between intraday high and intraday low. Each day in the past 1 week, the average volatility remained at 1.48%.

The stock is extremely overbought on RSI14 (84). Normally this will pose a good selling opportunity, but since the stock has broken the trend up the chance for a major correction due to high RSI is very small as the stock will find support at the trend broken.

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