Eli Lilly Shares Rally 8.14% on Four-Day Surge as Institutional Buying Drives Volume Spike

Eli Lilly (LLY) has surged 3.38% in the most recent session, extending a four-day rally with an 8.14% cumulative gain. This upward momentum suggests strong institutional participation, particularly given the elevated trading volumes observed in recent days. The stock’s price action and technical indicators now warrant a systematic evaluation to assess the sustainability of this trend and potential reversal points.
Candlestick Theory

The recent four-day bullish run has formed a series of strong green candles, with the price closing near or above the high of each session, indicating aggressive buying pressure. Key support levels are emerging around the $980–$990 range, where the stock previously found buyers after a dip in mid-December. Resistance appears to be forming near $1030–$1050, where prior price rejections and declining volume during pullbacks suggest a psychological barrier. A potential bullish engulfing pattern is visible as the recent rally absorbs earlier bearish shadows, though a break above $1065 (the most recent high) would confirm a breakout.
Moving Average Theory
Short-term momentum is reinforced by the 50-day moving average (approximately $850) crossing above the 200-day MA ($750), signaling a bullish “golden cross.” The 100-day MA ($800) also aligns with this trend, suggesting medium-term strength. However, the 200-day MA’s lagging nature implies long-term investors may still view the stock as overextended. The confluence of short-term MAs above long-term ones strengthens the case for a continuation, but a drop below the 50-day MA could trigger near-term profit-taking.
MACD & KDJ Indicators
The MACD line has crossed above the signal line, with a positive histogram expanding, confirming accelerating bullish momentum. The stochastic oscillator (KDJ) shows the %K line at overbought territory (>80), suggesting a potential short-term pullback. However, the %D line remains in a rising trend, indicating that the overall momentum is not yet exhausted. A divergence between the MACD and KDJ—where the MACD continues to rise while the stochastic %K flattens—may signal a temporary pause, but not a reversal, unless the price closes below the 10-day MA.
Bollinger Bands
Volatility has expanded significantly, with the 20-day Bollinger Bands widening to capture the recent $1030–$1065 range. The price currently sits near the upper band, suggesting a high-probability scenario for consolidation or a test of the band’s resistance. A breakout above $1065 would likely trigger further expansion, while a retest of the lower band ($980–$990) could act as a critical support level. Band contraction observed in mid-December preceded this rally, validating the current bullish phase.
Volume-Price Relationship
Trading volumes have surged during the four-day rally, peaking at over 5 million shares on December 15, confirming institutional buying. However, volume has slightly tapered in the last two sessions, raising questions about the sustainability of the move. A sustained increase in volume during a pullback would validate the continuation of the trend, while declining volume during a rally may indicate exhaustion. The recent volume pattern aligns with the price action, suggesting the uptrend is structurally sound for now.
Relative Strength Index (RSI)
The 14-day RSI has entered overbought territory (>70), a classic warning of potential short-term profit-taking. However, given the stock’s strong fundamental backdrop and recent institutional accumulation, this overbought condition may persist for several days. A drop below 60 would signal a temporary slowdown, but a retest of the 70 level with higher highs would confirm renewed momentum. Divergence between RSI and price action is currently absent, suggesting the trend remains intact.

Fibonacci Retracement
Applying Fibonacci levels from the December 1–15 rally (low: $760, high: $1065), key retracement levels at 38.2% ($955) and 50% ($912) act as potential support zones. The current price near $1060 is approaching the 78.6% retracement level, which historically acts as a critical resistance. A break above this level would target the $1120–$1150 range, while a failure to hold above $955 could trigger a deeper correction.

The confluence of bullish signals—strong candlestick patterns, aligned moving averages, and expanding Bollinger Bands—suggests a high probability of continued upward momentum in the near term. However, the overbought RSI and stochastic oscillator highlight risks of a short-term pullback, particularly if volume fails to support a breakout above $1065. Divergences between MACD and stochastic indicators may indicate a temporary pause but not an outright reversal unless the price closes below key moving averages or Fibonacci support levels. Traders should monitor the $980–$990 range as a critical area for trend validation, while long-term investors may consider the 200-day MA as a baseline for trend sustainability.