Back on August 4, 2022 I reviewed the charts of e.l.f Beauty (ELF) and recommended that "On most days I would be excited about the new highs on ELF but today I would be cautious because price momentum has slowed. Protect your profits if you are long."
In hindsight the price of ELF ignored the slowing momentum indicator and has gone on to double in price since August.
Let's review the charts again.
In this daily bar chart of ELF, below, I can see that prices have rallied four-fold from their May lows. Prices trade above the rising 50-day moving average line and above the rising 200-day line. The trading volume has been increasing in the direction of the trend and that is a classic bull market sign.
The daily On-Balance-Volume (OBV) line has been in a rising trend the past year and confirms the price gains we have seen. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line for much of the last year.
In this weekly Japanese candlestick chart of ELF, below, I see a very impressive rise in price. The two most recent candle patterns of ELF show upper shadows telling me that traders are starting to reject the highs. Prices are well above the rising 40-week moving average line but are not yet extended (overbought) above this indicator.
I learned a "rule of thumb" years ago that a stock was extended and due to correct when it was twice the level of the 40-week line. Not there yet.
The weekly OBV line is bullish. The MACD oscillator is in a bullish alignment above the zero line.
In this daily Point and Figure chart of ELF, below, I can see an upside price target in the $108 area. A trade at $76 or lower could start a downside reversal on this chart.
In this weekly Point and Figure chart of ELF, below, I can see a $115 price target.
Bottom line strategy: The pace of ELF's rally is slowing again and despite higher Point and Figure chart price targets I would be cautious.
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