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Key Takeaways

• Eli Lilly shares could remain under the microscope on Wednesday after falling sharply Tuesday as the pharmaceutical giant lowered its 2024 full-year revenue forecast.

• This tepid outlook adds to concerns about moderating demand for its flagship weigh-loss drugs.

• The stock staged a decisive breakdown below the lower trendline of a symmetrical triangle and the 50-day MA, opening the door to further short-term downside.

• Investors should watch key support levels on Eli Lilly's chart around $720 and $625, while also monitoring important overhead areas near $860 and $965.

Eli Lilly (LLY) shares could remain under the microscope on Wednesday after falling sharply in trade on Tuesday as the pharmaceutical giant lowered its 2024 full-year revenue forecast.

While the drugmaker said it anticipates sales of its flagship weight-loss drugs Mounjaro and Zepbound to accelerate as it ramps up production in the first half of this year, it noted that they grew slower than expected in the fourth quarter.

Eli Lilly shares climbed 32% last year but have slumped more than 16% since October after the company reported third quarter sales of the two drugs below Wall Street’s expectations, prompting concerns about moderating demand.

Below, we take a closer look at Eli Lilly's chart and apply technical analysis to identify several key price levels worth watching out for.

Symmetrical Triangle Breakdown

Since falling below the 200-day moving average (MA) in late October last year, Eli Lilly shares have consolidated within a textbook symmetrical triangle.

On Tuesday, the stock staged a decisive breakdown below the pattern’s lower trendline and 50-day MA, opening the door to further short-term downside. Importantly, the move occurred on the highest trading volume day in more than two months, indicating conviction behind the selling.

Let’s point out two key support levels to watch if the stock continues its decline, and also identify several important overhead areas to monitor during countertrend rallies.

Key Support Levels to Watch

The first lower level to watch sits around $720. Investors could look for entry points in this area near a trendline that connects a range of comparable price points on the chart from February to November last year.

A close below this level could trigger a larger decline to around $625, a location on the chart where the shares may encounter support near the prominent October and November 2023 swing highs.

Interestingly, this region sits slightly above a price target projected by a bars pattern, looking at a downtrend in the stock that immediately preceded the symmetrical triangle and repositioning it from the breakdown point.