e.lf. Beauty (ELF) technical analysis – e.l.f. Beauty (NYSE:ELF)

e.l.f. Beauty, Inc. ELF is gapping up on Thursday. The company agreed to acquire Hailey Bieber’s Rhode for $1 billion. The move adds diversification to its portfolio — and investors responded positively.

The news caused the stock to break out above resistance. Now it has reached another potential resistance level and may be set up to break out again. Breakouts tend to be followed by moves higher. This is why our team of expert traders has made it our Stock of the Day.

As you can see on the chart, the recent rally in ELF ran into resistance right around $90. It wasn’t a surprise that there was resistance at this level. It had been a support level.

Support levels can turn into resistance levels because of remorseful buyers.

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These are people who purchased shares at the support and regretted doing so when the price dropped. They decided to hold on to their losing positions, but they also decided that if they could eventually get out at breakeven, they would do so.

So, when the stock rallied back to $90, they placed sell orders. The large concentration of these orders made resistance form at the same price that had been support.

This morning’s move higher may have broken another resistance level. $101.85 was support in October and November so there may be resistance around it. If the shares can clear this price and stay above it, it could be a signal that further moves up in price may be coming.

If the price is higher than the resistance, it will show that those sellers are gone. They may have finished their orders or canceled them.

Either way, whenever a large amount of supply (sell orders) is removed from a market, buyers will be forced to outbid each other and pay premiums to draw sellers back in.

This price action could mean that the move higher in ELF will continue.

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