Lululemon stock tests breakout as traders watch for durable bottom

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Lululemon stock breakout watch

Highlights

Lululemon shares had declined 82% from their 2023 peak to an October low, despite prior oversold signals and failed bullish patterns.
Technical analyst Frank Cappelleri highlights a possible inverse head and shoulders breakout with a $119 price target and $99 stop level for LULU.
A sustained move above $119 and toward $130 could form a six-month base for LULU, potentially ending its long-term downtrend.

Technical setup points to a key test

As reported by CNBC, Frank Cappelleri of CappThesis says Lululemon's current chart pattern may offer an early opportunity for a tradable breakout, but only if it avoids repeating the stock's recent pattern of failed recoveries.

From its 2017 low to its 2023 high, Lululemon, trading as LULU, climbed nearly 1,000% before reversing sharply. By the stock's October low earlier this month, it was down 82% from its peak, showing that earlier signals such as a 20% drop into bear market territory in early 2024 and an oversold 14-week RSI reading below 30 in April 2024 did not stop the decline.

Cappelleri highlights a potential inverse head and shoulders pattern that formed after the stock gapped lower in September. A breakout from that formation could carry shares toward a measured-move target of $119, with risk managed through a $99 stop.

Longer-term base remains the bigger question

Even with a possible short-term trading opportunity, the broader issue is whether LULU can build a lasting base after multiple unsuccessful bullish setups. Over the past year, the stock has attempted to break out through five separate bullish patterns, and only one produced even a modest gain before sellers returned.

If the current move holds, reaches $119 and later pushes toward $130, that could help create a much larger basing pattern spanning nearly six months of price action. Such a development would give the stock a stronger technical foundation for further upside and could eventually put its long-term downtrend under pressure.

The analysis argues that the scale of the decline by itself is not a reason to buy. Instead, the focus remains on whether Lululemon can show the technical features of a sustainable bottom rather than another short-lived rebound.

Micron Technology’s weekly chart recently flashed a bearish signal after the stock slipped below a rising wedge pattern, suggesting the prior rally may be losing strength and opening the door to another leg lower. In our earlier article, we outlined how weakening RSI and MACD momentum could pull shares toward the $887–$903 area and then the $770–$807 range, unless Micron can reclaim key resistance with a weekly close above $1,010–$1,030.

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