Watch These Lululemon Price Levels as Stock Rises After Earnings

Lululemon Athletica (LULU) shares moved higher in premarket trading on Friday after the activewear retailer reported higher-than-expected profit and outlined efforts to accelerate the introduction of new products, offsetting weak sales and a cut to its full-year outlook.

The global retail chain’s stock has lost around half of its value since setting a record high in December as a slowdown in consumer spending amid persistent inflation and a series of missteps, such as the recent troubled launch of its Breezethrough leggings, weighed on investor sentiment.

Lululemon shares were up 4.5% at $270.65 about two hours before Friday’s opening bell.

Below, we review the technicals on Lululemon’s chart and identify important post-earnings price levels that are worth watching out for.

Descending Channel Breakout Test

After gapping below the 200-day moving average (MA) in late March, Lululemon shares have traded within a descending channel that has kept the price entrenched in a multi-month downtrend. More recently, a pre-earnings rally stalled earlier this week, with the stock finding resistance near the pattern’s top trendline and 50-day MA. However, the premarket move sets the stage for a potential retest of the area on Friday.

Following the athletic apparel maker’s quarterly report, investors should monitor four key chart areas, three of which also closely align with key Fibonacci retracement levels when applying a grid from the December high to August low.

Key Lululemon Chart Levels to Watch

Friday’s projected open looks set to test the closely watched $272 area, where the price will likely reencounter selling pressure near the descending channel’s top trendline and downward sloping 50-day MA.

A decisive breakout above this level could see the shares rally to around $293, roughly the same area as the 23.6% Fibonacci retracement level. This level on the chart may also encounter resistance near the May low, which matches a series of comparable trading levels in July.

Further buying could drive a move up to the $335 region. This area, which sits just below the 38.2% Fibonacci retracement level, may attract selling interest around the prominent April swing low and early June swing high.

A longer-term uptrend could see a retest of the key 50% Fibonacci retracement level at $371, an area on the chart where the shares may also find investors willing to take profits near the April countertrend peak positioned toward the top of the descending channel.

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