Estee Lauder Surges 8.71% on Bullish Technical Signals Amid Key Resistance Test

The Estee Lauder (EL) has surged 3.88% in the most recent session, extending its three-day rally with an 8.71% total gain. This sharp upward movement has pushed the stock near key technical levels, warranting a comprehensive analysis of its structure and momentum dynamics. The following evaluation integrates multiple technical frameworks to assess the sustainability of the rally and potential reversal risks.

Candlestick Theory

The recent price action reveals a strong bullish bias, characterized by a series of higher highs and higher lows over the past three sessions. A notable resistance level forms near $93.92, the high of the most recent session, while a critical support zone lies between $89.66 and $86.61, reflecting prior consolidation areas. A "Bullish Engulfing" pattern emerged on November 21, where the closing price ($89.9) engulfed the preceding bearish candle, signaling a potential continuation of the uptrend. However, the absence of a confirmed breakout above $93.92 suggests the market remains cautious, and a failure to hold above $89.66 could invalidate the bullish case.

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Moving Average Theory

Short-term momentum aligns with the 50-day and 100-day moving averages, which are currently below the 200-day line, indicating a multi-month bullish bias. The 50-day MA has crossed above the 100-day MA in recent weeks, forming a "Golden Cross," reinforcing the near-term uptrend. However, the 200-day MA at approximately $85.00 acts as a critical psychological floor; a sustained close below this level could trigger a reevaluation of the long-term trend. The confluence of short-term momentum and long-term structure suggests a continuation of the rally, though traders should monitor for a potential bearish divergence between price and moving averages.

MACD & KDJ Indicators

The MACD histogram has expanded in recent sessions, reflecting increasing bullish momentum, while the KDJ indicator showed a "Golden Cross" on November 21, aligning with the candlestick signal. However, the backtest results highlight a key caveat: the recent combination of MACD and KDJ signals led to a 1.77% loss over five days, underperforming the market. This divergence suggests that while the indicators may suggest bullish conditions, other factors—such as overbought readings or volume exhaustion—could counteract the signal. The RSI, currently approaching 70, indicates overbought conditions, raising the probability of a short-term pullback.

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Bollinger Bands

Volatility has expanded recently, with the bands widening to accommodate the 8.71% rally. The price has tested the upper band at $93.92, a level that may now act as resistance. If the bands begin to contract, it could signal a period of consolidation before a potential breakout. The current position near the upper band, coupled with the overbought RSI, suggests a high likelihood of a retracement toward the 20-day MA at $91.00 or the middle band.

Volume-Price Relationship

Trading volume has surged during the rally, peaking at 8.57 million shares on November 5, coinciding with a significant price drop. While recent volume remains elevated (e.g., 3.73 million shares on November 24), it has not yet reached the levels seen during prior breakouts. This suggests that while buying interest is present, it may not yet be sufficient to sustain a prolonged upward move. A divergence between price and volume—where volume declines despite higher closes—could signal weakening momentum.

Relative Strength Index (RSI)

The RSI has reached 68–70, indicating overbought conditions. Historically, this level often precedes a correction, though the exact timing remains probabilistic. A close below 60 would suggest a shift in momentum, while a retest of the overbought threshold could confirm the strength of the rally. The RSI's alignment with the overbought zone, combined with the MACD/KDJ backtest results, underscores the need for caution.

Fibonacci Retracement

Key Fibonacci levels derived from the October 27 high ($103.52) and November 6 low ($84.61) include $95.30 (38.2%) and $92.74 (50%). The current price near $93.39 suggests a potential test of the 50% retracement level, which could act as a pivot point. A break above $95.30 would target the 61.8% level at $90.20, while a failure to hold above $92.74 could trigger a retest of the 38.2% level.

Backtest Hypothesis

The backtest strategy of buying EL on MACD and KDJ golden crosses yielded a 1.77% loss over five days, underperforming the market by 1.30 percentage points. This outcome highlights the importance of incorporating additional filters, such as RSI overbought conditions or volume analysis, to refine entry criteria. For example, combining the MACD/KDJ signal with a RSI below 70 and expanding Bollinger Bands could improve the risk/reward profile. The divergence between the bullish indicators and the negative backtest result underscores the need for confluence among multiple metrics to enhance reliability.

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