Estee Lauder Shares Drop 3.24% Amid Bearish Technical Signals

The Estee Lauder (EL) closed at $86.77 in the latest trading session, declining 3.24% on substantial volume of 4.8 million shares. This move represents a significant retreat from the recent high near $90.50 and sets the stage for our technical assessment incorporating multiple analytical perspectives.
Candlestick Theory
Recent price action reveals bearish signals. The three most recent candles form a potential evening star pattern near the $90 resistance level (Jul 23: small real body after gap up, Jul 24: long red candle). This suggests exhaustion following the rally from the mid-$80s. Key support emerges around the $85 region, corresponding to the significant volume surge in early July and June's consolidation high. Resistance is now firmly established at the psychologically important $90 level and the July peak near $90.50.
Moving Average Theory
The 50-day moving average (~$80.75) has crossed bullishly above both the 100-day (~$78.10) and 200-day (~$74.90) averages, indicating positive intermediate to long-term momentum. However, the current price sits below the 50-day MA ($86.77 vs ~$80.75?), signaling short-term bearish pressure. The alignment of the 200-day > 100-day > 50-day MAs suggests the primary trend remains upward despite the recent pullback. Holding above the rising 100-day MA ($78.10) is crucial for the bullish structure.
MACD & KDJ Indicators
The MACD line is below its signal line and the zero line, confirming bearish momentum acceleration in the short term. While the KDJ lines have retreated from overbought territory (recently above 80), the %K (39) is nearing a potential oversold crossover below %D (45). This suggests selling pressure is intense but a potential short-term rebound could emerge if bullish divergence develops. Currently, momentum strongly favors the downside.
Bollinger Bands
Price is testing the lower Bollinger Band (~$85.60), a level not touched since the sharp rally began in early July. This follows a pronounced contraction of the bands during the June consolidation, indicating the subsequent breakout volatility was anticipated. A sustained break below the lower band could signal an acceleration of the downtrend. Conversely, holding near the lower band might precede a mean-reversion bounce towards the middle band (~$87.50).
Volume-Price Relationship
Recent price validation is negative. The sharp decline on July 24 occurred on significantly above-average volume (4.8M shares vs recent average ~3M), confirming the selling pressure. This contrasts with the mid-July rally, where the breakout above $90 (Jul 10) occurred on massive volume (5.9M), but subsequent gains lacked strong volume support. The high-volume reversal day at $90 establishes strong resistance. Supporting volume on any rebound near $85 support will be critical for sustainability.
Relative Strength Index (RSI)
The 14-day RSI has plunged to approximately 38, moving sharply from near overbought (approaching 70 in mid-July) towards oversold territory (<30). While not yet oversold, the rapid descent signals strong negative momentum. This drop enhances the bearish outlook from other indicators. A bounce could occur near oversold levels, but a failure to reach oversold readings before rebounding would indicate underlying weakness.
Fibonacci Retracement
Applying Fibonacci retracements to the significant rally from the May 30 low (~$63.66) to the July 15 high ($90.20) identifies key levels. The 38.2% retracement sits near $80.70, aligning significantly with the gap created on July 10 and the 100-day MA. The 50% retracement rests at ~$76.90, overlapping with the 200-day MA and the June swing high. The 61.8% level is near $73.20. The initial target for the current pullback would logically be the 38.2% level at ~$80.70.
Confluence & Divergence
Significant confluence points reinforce key levels: the $90 resistance level (Candlestick highs, Volume spike rejection), the $85 immediate support (recent breakout point, Bollinger Band, VWAP anchor), and the stronger $80-$81 support zone (38.2% Fib, 100DMA, gap support). A notable divergence exists: while price has retreated substantially, the long-term moving averages (especially 200DMA > 100DMA) remain positively aligned, suggesting the primary trend isn't conclusively broken yet. However, the convergence of bearish signals from Candlesticks, Volume, MACD, RSI, and Bollinger Bands at the $90 resistance overrides this divergence in the short term.
In conclusion, The Estee Lauder faces significant near-term bearish pressure following the rejection at $90, confirmed by high-volume selling. A test of the primary support zone between $85 and $81 appears probable. While the long-term moving average structure offers underlying support, traders should monitor the $85 level closely; a decisive breach could accelerate the decline towards the $81-$80 confluence zone. A rebound lacking conviction in volume would likely encounter strong resistance near $88-$90.