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Fan Yang

Lululemon Athletica (LULU) Likely to Retest the $120 Support, and Break it

Lululemon $LULU has been in a bearish correction mode since October after it peaked at an all-time high of $164.79. By mid-November, price corrected down to just under $120 before finding support. However, price action this week suggests that the bearish correction is not over, and that there will be more pressure on this $120 area support.

LULU Daily Chart

(click to enlarge)

Bears in Charge:
- When price bounced off the 200-day simple moving average (SMA) around $120, the market got excited and kept LULU "bullish" in the long-term.
- While LULU might still be bullish in the long-term, its short to medium-term outlook might be bearish-neutral.
- The fact that price was faded sharply from $140 suggests bears are still in charge.
- Note that the rejection at $140 reflects respect for a previous consolidation, as well as the 50- and 100-day SMAs.
- The RSI was held under 60, which reflects maintenance of the prevailing bearish momentum.
Next Support:
- I think there needs to be some more capitulation of the 2018 rally. 
- If price slides below $117.40, we should see further downside, at least towards $100.
- $100 might be a psychological support, but if the overall market sentiment remains bearish, LULU could get dragged down further.
- But for now, let's anticipate downside risk to $100. 

LULU Weekly Chart

(click to enlarge)