ELF Beauty (ELF): Ready for a Turn? Key Insights Inside!

Following the last earnings call, ELF Beauty Inc. has caught the attention of many investors, with the stock surging 25% since then. However, we do not believe this signifies the emergence of a new super-bullish trend. Instead, we anticipate entering Wave B, which will likely lead to another significant pullback. In our view, the stock has completed Wave (5) of the first cycle and is now in the process of forming an overarching Wave 2. The exact duration and nature of this Wave 2 remain uncertain, as it depends on whether it will be a longer or shorter corrective wave.

In the coming days, we expect the stock to rise again, potentially reaching up to $207, which should be the maximum target. Just below this level is the high-volume node's point of control, which we expect to hold. It is possible that the stock could reach the high-volume node edge at $210, but it is unlikely to surpass this level. After this rise, we anticipate another sell-off down to Wave C, which we expect to fall within the range of $119 to $96. This expectation is based on the assumption that this is a zig-zag correction, where Wave C extends significantly below Wave A.

Before the recent rise, we observed a clear collection of liquidity a few days ago, leading to the breakout of the trendline. The RSI is not yet overbought, but it could become so in the coming days. If the RSI forms higher highs and the price breaks above the high-volume node edge at $221, it could indicate the potential for further upward movement. However, our current expectation is that the stock will hit resistance and then enter Wave C, leading to a deeper correction.

Comment:

Since our last analysis of ELF Beauty Inc., the primary scenario we predicted has played out. The stock entered the target zone between 61.8% and 78.6%, hitting resistance near the Point of Control at around $204. Since then, it has experienced a significant sell-off, currently down approximately 14%.

We believe there is potential for further downside. The initial hype following ELF’s strong earnings report, which caused a 30% surge, is now fading. The critical question is whether this is a mere gap close before an upward trend resumes or if it signals a continued decline.

We will continue to monitor the situation closely and provide updates as the price action unfolds. Current signs suggest that further selling pressure might be ahead.