Playing the Setup in Eli Lilly

Published on Friday, 23 July 2010 05:20 Written by Christian Paolinetti

New York, July 23rd (TradersHuddle.com) - Shares of Eli Lilly & Co. (NYSE:LLY) closed the trading session at $35.15 near its 50 day and 200 day moving averages currently set at $33.95 and $35.05 respectively. Eli Lilly's price action is above these important levels, which could translate into a trading opportunity.

Eli Lilly (NYSE:LLY) principal activities are to develop, manufacture and market pharmaceutical-based health care solutions. The company specializes in research and development, production and marketing of products for the treatment of diabetes worldwide, such as insulin and insulin delivery devices.. Some of the company's patents include Zyprexa, Prozac, Permax, Humulin, Evista, Humalog, Humatrope, Vancocin, Keflex, Nebcin , Lorabid, Gemzar, Tylan, and Rumensin.

Although the price action is above important moving averages, it's important to highlight that the 50 day moving average is currently below the 200 day moving average resulting in not a prime setup where buying the dip will present a good trading opportunity.

Looking at peaks and troughs horizontal support and resistance levels, we can see current calculated support at $32.82 and calculated resistance at $35.60. These levels should also be evaluated by traders when planning their trades, as they provide an insight into the latest price action.

If traders want to establish a position on Eli Lilly, should evaluate their trade, as it will certainly be better to wait, given that the stock is technically broken with the 50 day moving average trading below the 200 day moving average. Traders can also look at the current range defined by the peaks and troughs see where the current price action of stock is and establish a short trade versus those levels.