Lululemon Rises 3.18% on Heavy Volume Signaling Bullish Reversal After June Slump

Lululemon Athletica (LULU) advanced 3.18% in the latest session, marking the second consecutive day of gains and totaling a 5.00% increase over two days. This rally from $226.11 to $233.31 occurred on above-average volume (2.92M shares), suggesting renewed bullish conviction after a steep mid-June selloff.
Candlestick Theory
The recent two-day surge forms a bullish continuation pattern following the June 6th "bearish engulfing" candle that triggered a 20% collapse. Key resistance at $238.50 (July 10th high) and $247.70 (late June swing high) must be surpassed to confirm trend reversal. Support is established at $222.50 (July 15-16 consolidation low), with failure here risking retest of the $216 YTD low. The long lower wick on July 15th signals strong buyer rejection below $222.
Moving Average Theory
The 50-day MA ($244.50) caps recent rebounds, maintaining its bearish death cross below the 100-day MA ($259.80). However, price reclaiming the 200-day MA ($265.60) remains improbable near-term without fundamental catalysts. The widening separation between the 50/100-day MAs and price reflects entrenched downtrend pressure since June.
MACD & KDJ Indicators
MACD shows nascent bullish momentum with its histogram turning positive on July 17th – the first since early June. KDJ (K:62, D:55, J:76) signals emerging overbought risk with J-line nearing 80. While MACD improvement supports near-term upside, KDJ’s proximity to overbought territory warrants caution for pullbacks toward $227-$230.
Bollinger Bands
July’s consolidation triggered a volatility contraction with bands narrowing to ±$6 around the 20-day MA. The 17th close above the upper band ($233.75) indicates breakout momentum. Band expansion above $235 would target $241 (upper band projection), but close back inside the bands would invalidate the breakout.
Volume-Price Relationship
Distribution marked the June crash (16.1M shares on 6/06), while July’s rebound shows accumulation: 4.77M shares traded during 7/15’s hammer reversal. Recent gains on rising volume (2.92M vs 3.23M prior) validate upside momentum, though resistance tests require volume expansion beyond 4M shares for sustainability.
Relative Strength Index (RSI)
RSI(14) rebounded from oversold (28.5 on 7/15) to 54.3 – a neutral reading with recovery potential. While momentum bias shifts upward, divergence from June’s price collapse (RSI never reached <20) implies underlying weakness. Overbought signals above 70 would face credibility challenges near stiff resistance zones.
Fibonacci Retracement
Applying Fib levels from June’s $412 high to $216 low shows key retracement hurdles at $314 (38.2%), $339 (50%), and $365 (61.8%). The recent bounce stalled near the 23.6% level ($256.50) twice, making $255-$260 immediate resistance. Confluence exists here with the 50-day MA and psychological $250 level.
Confluence & Divergence
Confluence supports bullish near-term bias: Bollinger breakout aligns with MACD positivity and volume-backed gains. Critical divergence exists between RSI’s mid-range position and extreme price damage since June – this disconnect warns that strength above $250 requires stronger momentum confirmation. Bears regain control below $222, targeting $200 psychological support.