September 1 Chart of the Day - Lululemon
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Lululemon (LULU) said second-quarter revenue increased 18% year-over-year to $2.21 billion, which beat the consensus estimate of $2.17 billion, according to Benzinga Pro. The company reported quarterly earnings of $2.68 per share, which beat analyst estimates of $2.54 per share.
In looking at the monthly chart price seemingly has been ping ponging within a range roughly between $300 to $400 occasionally and temporarily moving above or below it for the past three years.
So when we see this type of rangy price behavior across any time frame what we like to do is go down a level or two in time frame to use Fibonacci and Trend to see if there are tradable or investable levels of interest.
And in the case of Lulu, moving down to the weekly chart reveals exactly that!
Using a concept called "Fib Sequencing," as taught in our NEW Master the Magic of Fibonacci Course, we can see how price has been steadily moving up within the higher time frame defined range providing multiple levels of interest for trading and/or investing.
In fact, we can see where price recently broke out of a "wedge" and then provided a classic "break and retest" of that wedge structure as it also powered through a "change control zone".
Change control zones are one of the five tools we teach when charting anything. By definition, they are an area that represents where neither the bulls nor bears are in charge.
Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it. Or, price can trade aimlessly sideways within it. When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.
Closing at $381.26 on Thursday, logical upside targets could be $400 or above. However, if price were to fall from here a logical destination could be back down towards the $350-$360 magnet-like change control zone...
Lastly, we can see on the weekly chart that price dictates use of all 5 Price Action Technical Analysis Tools that we teach in our BEST SELLING Price Action Mastery Certification Course.
So what's next?
We don't make predictions...
Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.
- Support/Resistance
- Trend
- Fibonacci
- Supply/Demand Zones,
- Change Control Zones
Take a look at the charts and let us know what you think.
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