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ELI LILLY Is a -20% correction possible?

BATS:LLY   Eli Lilly and Company
Eli Lilly (LLY) gave us the best possible buy entry at the bottom of the Channel Up last time we gave a call on it (December 14 2023, see chart below) and not hit our $705.00 Target but also aggressively broke above the pattern:


In order to grasp the magnitude of that move, this time we zoom out on the 1W time-frame where we see the long-term pattern since LLY's parabolic move started, in mid 2018 following 3 years of consolidation. The pattern that emerged since is a 6-year logarithmic Channel Up, which since 2023 has gone extremely parabolic.

The key characteristic on this long-term price action is the unique pattern that the 1W MACD forms, a Bearish Cross followed by a Bullish Cross. Four such occurrences since 2018 have caused the stock to form a Higher High top at a minimum 2 weeks and maximum 10 weeks after the Bullish Cross. Currently we are on the 3rd week since the latest 1W MACD Bullish Cross and if it extends to 10 weeks, we can technically expect the new top by April 08 2024.

However, the 1st red 1W candle following the Bullish Cross on those 4 past occurrences has always been the top, or near it. Given the fact that LLY is so close to the top of the 6-year Channel Up, we can expect that a correction will start soon. The minimum correction has been -17.44% and the maximum -23.23% (2 occasions out of the 4). Also before a new long-term rally started, the price hit the 1W MA50 (blue trend-line). Long-term investors can wait for such a contact before buying again heavily Eli Lilly for a new 12-month run.



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