Eli Lilly Rallies 9.4% In Four Days As Technicals Signal Strong Accumulation

Eli Lilly (LLY) concluded the most recent session with a notable 3.62% gain, extending its winning streak to four consecutive days. This rally culminated in a cumulative 9.40% advance over the period, reflecting robust near-term buying pressure following recent volatility.
Candlestick Theory
The sharp, high-volume decline on August 7th (-14.14%) formed a prominent bearish marubozu, establishing a significant resistance zone near $760-$770 (previous support turned resistance). The subsequent recovery, marked by four consecutive white candles with increasing closes and higher highs/lows, suggests strong accumulation. The latest session closed near its high ($684.43 vs. high of $685.48), reinforcing bullish conviction. Immediate support now resides near $625 (August 8th low and swing point), with resistance at $685.48 (current high) and the critical $760-$770 zone.
Moving Average Theory
The price currently trades below all key moving averages (50-day, 100-day, 200-day), reflecting the impact of the mid-July to August downtrend. However, the steepness of the decline has created wide separation from the longer-term MAs. A nascent bullish signal is emerging as the 50-day MA shows signs of flattening while the price rallies, potentially foreshadowing a near-term golden cross. The 200-day MA near $810-815 remains major long-term resistance.
MACD & KDJ Indicators
MACD histogram has shifted into positive territory after a bullish crossover occurred during the recent recovery, signaling building upward momentum. KDJ shows similar confirmation: the K-line (55) crossed above the D-line (48) from oversold levels, while the J-line (69) approaches overbought territory but hasn’t peaked yet. This convergence suggests near-term strength is likely to persist, though the J-line nearing 70 warrants monitoring for potential exhaustion.
Bollinger Bands
Bands expanded sharply during the August 7th sell-off, indicating heightened volatility. Recent price action has hugged the upper band during the rally, reflecting persistent buying interest. The bands are now contracting slightly, suggesting a potential cooldown or consolidation phase may develop. A sustained close above the upper band ($690 approximate) would signal exceptional strength but also increase short-term reversion risk.
Volume-Price Relationship
The August 7th plunge occurred on significantly elevated volume (26.1M shares), confirming capitulation. The subsequent four-day recovery was validated by rising volume, culminating in the highest single-day volume (8.33M) of the rally on August 14th – a bullish confirmation signal. This volume structure suggests strong institutional accumulation supporting the rebound. However, resistance tests near $760 will require similar or greater volume for a decisive breakout.
Relative Strength Index (RSI)
RSI (14-period) recovered sharply from deeply oversold levels (below 30 during August 7th-8th) to its current reading of 58. This neutral-midpoint positioning suggests room for further upside before traditional overbought concerns (above 70) emerge. The swift recovery from oversold and avoidance of forming a lower high on the August 14th lower high price (divergence risk) supports continuation potential. Investors should note RSI can remain elevated in strong trends.
Fibonacci Retracement
Applying Fibonacci retracement to the downtrend from the July peak (~$880) to the August low ($625.65) reveals key levels: 38.2% at $721.5, 50% at $742.5, and 61.8% at $763.5. Price has already breached the 38.2% level decisively. The 50% retracement ($742.5) aligns with the significant resistance near $760 identified via price action and the 50-day MA, creating a critical confluence zone. This region represents a major test for the sustainability of the current rebound.
Confluence & Divergence
Significant confluence exists around the $720-$770 resistance band, reinforced by the 50% Fibonacci level, the 50-day MA, and prior price structure. A decisive break above would strongly signal trend reversal potential. Minor divergence is noted in the MACD/RSI momentum strength versus price: while the rebound is strong, momentum readings haven't yet reached levels typical of prior major highs, leaving room for further upside before exhaustion signals emerge. The primary technical risk remains the established downtrend shown by the alignment of major moving averages above price. Sustained volume on further advances and overcoming the Fibonacci/MA confluence are critical next hurdles for Eli Lilly's recovery to evolve into a longer-term uptrend.