Lemonade Spikes Higher: Can The Insurance Stock Bust Through This Trendline?

Zinger Key Points
  • Lemonade is attempting to break up from a descending trendline on the daily chart Friday.
  • If the stock is able to break above the area, a larger reversal could be in the cards.

Lemonade, Inc LMND closed up more than 6% higher on Wednesday, in tandem with the general markets, which saw the S&P 500 pop up almost 2%.

Stocks in the insurance sector were seeing a boost amid Hurricane Ian landing on the Florida coast.

The hurricane is expected to cause widespread damage after intensifying into a category 4 storm. When the storm made landfall in Cuba as a category 3 storm earlier this week, it took out the country’s power grid and caused flooding and extensive property damage.

When facing the prospect of a hurricane, animal insurance can help with peace of mind.

Lemonade offers award-winning pet insurance that is superfast to sign up for and has lightning-fast claims payments. Lemonade’s digital pet insurance platform is America’s top-rated insurance for cats and dogs, covering everything your pet needs and offering huge savings on routine care such as dental cleaning and parasite tests.

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The Lemonade Chart: On Wednesday, Lemonade was attempting to break up from a descending trendline, which has been holding the stock down since Aug. 15. When a stock breaks up from a descending trendline it can indicate a larger reversal to the upside is on the horizon.

  • The spike higher on Wednesday also negated Lemonade’s downtrend because the stock formed a higher high above the most recent lower high, which was formed on Monday at $22.39. If Lemonade is able to break up from the descending trendline over the next few days, the stock may retrace to test the area as support, which may be the point where the next higher low occurs.
  • If Lemonade closes the trading day near its high-of-day price, the stock will print a bullish Marubozu candlestick, which could indicate higher prices will come again on Thursday, If the stock closes the session with an upper wick, lower prices could be in the cards.
  • Lemonade has resistance above at $23.40 and $25.59 and support below at $20.99 and $18.08.
  • There are a variety of tools one can use for technical analysis, including Ninja Trader. Ninja offers advanced charting and other products as part of its trading suite that is designed to assist investors with navigating the markets. The platform allows its members to automate and execute trades and to test trading ideas through simulation. 

Photo: REDPIXEL.PL via Shutterstock

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