Eli Lilly (LLY) shares dropped more than 4% on Thursday, continuing a hasty retreat from their 澳洲幸运5官方开奖结果体彩网:record high earlier this month, as investors assessed the possible impact of a 澳洲幸运5官方开奖结果体彩网:promising new weig✤ht-loss injection developed by Viking Therapeutics (VKTX) on the drugmaker’s own weigh anti-obesity drug, Mounjaro. Last week, Eli Lilly shares tumbled after Swiss pharmaceutical firm Roche Holding AG said its new non-injectable weight-loss drug has shown 澳洲幸运5官方开奖结果体彩网:encouraging early stage data.

Below, we take a closer look at Eli Lilly’s chart and point out important price levels to watch out for using 澳洲幸运5官方开奖结果体彩网:technical analysis.

Chart Signals Potential Reversal

Eli Lilly shares have trended consistently higher since the 50-day moving average (MA) crossed above the 200-day MA in April last year to form a bullish 澳洲幸运5官方开奖结果体彩网:golden cross signal. However, the stock’s technicals point to a potential reversal.

Firstly, as the drug maker’s stock climbed to a record high earlier this month, the 澳洲幸运5官方开奖结果体彩网:relative strength index (RSI) made a comparatively lower peak to create a bearish 澳洲幸运5官方开奖结果体彩网:divergence, indicating slowing buying momentum🐼. Secondly, the price closed decis🥀ively below a multi-month uptrend line and the 50-day MA on Thursday, suggesting a breakdown of the longer-term trend.

Watch These Key Support Levels

Eli Lilly shares were down 0.1% at $820.00 in premarket trading about two hours before Friday's opening bell. The stock has lost 15% of its value since hitting its all-time intraday high of $966.10 on July 15.

If Eli Lilly shares continue their decline, investors should monitor three key areas on the chart where they could encounter support.

The first level to watch sits around $790, an area where the stock may attract buying interest near a 澳洲幸运5官方开奖结果体彩网:horizontal line connecting an extended period of 澳洲幸运5官方开奖结果体彩网:consolidation betw𝔉een February and May w💖ithin the longer-term uptrend.

A close below this ar▨ea could see a fall to the $725 region, where the price would likely find support from the lower portion of the consolidation period discussed above, which ✤also currently closely aligns with the rising 200-day MA.

Finally, a more significant drop opens the door to a retest of the $625 level, where buyers may be happy to scoop up shares near a trendline linking the October and November 2023 澳洲幸运5官方开奖结果体彩网:swing highs with the low of a minor pullback in January this year.

Bear Trap Still a Possibility

If the current breakdown turns out to be a 澳洲幸运5官方开奖结果体彩网:bear trap, which lures investors into selling before the price makes a prompt recovery, we can speculate an upside 🦹target by using a bars pattern.

We do this by extracting the trending move from April to July and applying it from Thursday’s low, which predicts a 澳洲幸运5官方开奖结果体彩网:price target of around $1,060.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our 澳洲幸运5官方开奖结果体彩网:warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.