LULU Showing signs of double topping & Bubble Deflation.The price action on the weekly chart clearly shows we have a double top on the candlestick bodies and a stark and merciless incidence of classic bearish divergence. The RSI does appear to have a resistance line it began to set in May of last year and that does give some more wiggle room for perhaps a couple of small green weekly candles.
A look at the daily chart shows that the RSI resistance is still very present and it predicts a downturn from the current level. The blue is divergence from within the current top and the orange is long term divergence from the other top, so the second top has internal divergence to tear it apart, and it divergence from the first top. As a general rule “gaps get filled” and the price action gapped up and that distance should generally be filled. A look at the volume profile also shows there is not a whole lot of volume holding this uptrend up and our next High Volume node is at 125. We might see some distribution there if the indicators show some bullish divergence but I think that would be a bull trap as we continue down to $80 or even lower as the LULU bubble deflates
Moving average traders should be watching for a bearish cross of the 50 and 200, which came frightfully close. When it does happen I don't think we will see the bear-bull-bear cross combo, I think the bear cross will happen once and be severe, but that is more a strong hunch than a prediction
