Eli Lilly (LLY) shares hit a record high on Tuesday after the company announced that clinical trials of tirzepatide, the active ingredient used in the company’s diabetes drug Mounjaro and injectable weight-loss drug Zepbound, significantly reduced patients’ risk of developing type 2 diabetes.

Sales of Mounjaro and Zepbound – which studies also show to be highly effective in treating heart failure – exceeded Wall Street estimates for the pharmaceutical company last quarter, helping the company’s shares rise more than 18 percent this month.

Now let’s take a closer look at Eli Lilly’s chart and use technical analysis to identify key price levels to watch.

Widening wedge in the game

Eli Lilly shares have been trading within a widening wedge since early May last year, helping to establish clearly identifiable support and resistance levels.

Earlier this month, the price attracted buying interest near the pattern’s lower trendline, with an earnings-related gap on August 8 accelerating the pharmaceutical company’s stock’s recent upside momentum.

Although equity turnover trended downward last week, Tuesday’s increase occurred on above-average volume, indicating renewed institutional activity.

Eli Lilly shares rose 0.4% to $954.01 in premarket trading on Wednesday about two hours before the market opened. The stock hit an all-time high of $967 on Tuesday.

In the coming trading sessions, market participants should watch several important price levels on Eli Lilly’s chart.

Support levels to watch

First, it’s worth watching the $885 area just above the upsloping 50-day moving average, a spot on the chart that’s likely to find support from a trendline connecting a series of similar trading levels from June to August.

A more significant decline could see the stock revisit the lower support level of $790, where they could attract buying interest near a horizontal line connecting a consolidation period in the stock from February to April with the recent price action around this month’s swing low.

Resistance levels to monitor

The first higher price to watch is $950, very close to the stock’s record close in mid-July. Interestingly, shares gave up earlier gains in trading on Tuesday and closed around that price, confirming it as a key resistance area.

Further buying could complete a move to $1,000, where the price would likely face resistance from the psychological round number and the upper trendline of the broadening wedge pattern. A short-term test of this area would also likely coincide with the Relative Strength Index (RSI), which signals overbought conditions.

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At the time of writing, the author does not own any of the securities mentioned above.