Mapping the Market: Eli Lilly shares ready to rally again

Shares in Eli Lilly rose more than 70% from their 2026 low to ​the record high they hit on Thursday, and more gains could ​be in store, technical analysis indicates.

Click here for ‌a ​detailed technical analysis chart. Technical analysis uses charts of price history to map out where a stock could go next.

When shares are rising, analysts examine charts for something called resistance, a level that could act as a ‌ceiling for the price. Resistance levels are also used as potential targets for the stock. Finding resistance in shares of a company in record-high territory, such as Eli Lilly, can be tricky. One thing analysts use is big round numbers. Market participants often focus on these types of levels as potential stopping points in any market. They ‌refer to big round numbers as psychological levels.

Another tool chart watchers use is something called Fibonacci projections – also called Fibonacci extensions -- which are percent-based ‌calculations derived from the scale of a rise and subsequent pullback in a stock. Fibonacci projections drawn from Eli Lilly’s most recent rally from its October 8 low to the November 5 high and then retreat to the November 6 low reveal a potential target of $1,655 — about 16% above Thursday's close, according to data supplied by LSEG. Interim targets along the way would include $1,494, $1532 ⁠and $1,579.

Rallies ​tend to come in phases. Following the ⁠early October to early November rally, Eli Lilly shares moved sideways. This is what analysts call consolidation -- when market participants digest gains or losses and prepare for the next move. This is ⁠a normal part of any rally, and in Eli Lilly's case it suggests the market is setting up for another leg higher. When chart watchers start to expect gains, ​they look to corroborate their view with market measures of volatility and momentum. One is called Bollinger Bands, which use two lines measuring variance from ⁠a moving average to gauge volatility.

Another is called the Relative Strength Index, which gauges the speed and scale of a move to determine momentum. Moving Average Convergence Divergence, or MACD, compares two ⁠moving averages ​to produce a reading on momentum. All three of these tools indicate that Eli Lilly could keep going higher.

However, there is always two-way risk in any market. If Eli Lilly shares were to fall below the $1,377-to-$1,383 price range, then analysts would question whether further gains were possible. A drop below $1,333.22 would ⁠probably end the rally story. What the chart shows:

(Mapping the ⁠Market is a daily column written by Reuters journalists. The commentary is based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute ‌investment advice or trading ‌recommendations. ) (Christopher Romano is a Reuters market analyst. The views expressed are his own. ​Editing by Burton Frierson and David Gaffen)