Buy Eli Lilly & Co. (NYSE:LLY) Near $46-$49 Or Above $59

Denver, CO, 08/09/2013 (Avauncer.com) – Eli Lilly & Co. (NYSE:LLY) (Closed: $53.57, Down: 0.05%) dived down at the opening hours on Thursday but recovered the losses later to close flat. The volume at 17.5 million was higher than the average of 5.5 million signifying that all the supply was gobbled up.

The long term charts show the stock is standing at a crucial juncture at this point of time. Either the bulls will win and bring the confirmation of a long term trend reversal or the bears will unload all their supplies and take the stock back to the 2009 bottom of $27.21 or lower in the coming months. Let’s check the charts further to get an idea who can be the winner.

The stock had an uninterrupted run in the period of 1993 – 2000 when it reached the top of 109 from the low of $10.9, an exact 10 times. The subsequent correction took the form of a Double Corrective (Flat – X- Zigzag) which ended at $27.21 in 2009. This Double Corrective was contained in a perfect channel and the price confirmed the bottom when it broke the upper boundary of the channel at $41-$42. The breakout created yet another pattern called Bump & Run reversal pattern. These two patterns give us two different targets. The completion of a Double Corrective implies an 80% retracement as the next move, $92.59 in this case. It has corrected exactly 38% so far, so long way to go yet. The Bump & Run pattern gives us a target of $69.

But for these huge targets coming true, the price must break $58.50, the last swing high & $61, the previous B wave top. The major support area would be $46 - $49 - a nice buying zone. In the short term, the direction would be set by a breakout of the range of $52.70 - $54.70.