Step 1: Trend Analysis – Price Action and Context

• Medium-Term Trend (April–July 2025):
  • LLY peaked at ~$900 (April 30) before a swift, high-volume selloff to ~$794 (May 1), showing a classic exhaustion gap and a sharp reversal pattern suggesting distribution among institutions. Since then, price action has been volatile and sloped downward, with failed recovery rallies.
  • From May–July, the stock oscillated with a series of lower highs and lower lows (descending triangle), confirming bearish sentiment.
• Short-Term Action (late July):
  • July 24–28: A brief spike above $810 (July 25) followed by a quick reversal back sub-$800, showing an inability to sustain breakouts—indicative of "bull traps."
  • July 29–31: Sharp drop from $808 (July 28) to sub-$760s (July 30–31) with very high volume (July 29: 7.1M shares), the highest in months, indicating capitulation or forced selling, not healthy accumulation.
  • Intraday July 31: Massive volatility. Early plunge from ~$761 to intraday lows near $737 followed by a rebound to $763 suggests panic selling met with some dip buying, but price failed to reclaim recent highs, closing at $763.28 (well off recent peaks).

Step 2: Volume Profile and Market Participation

• Distribution and Capitulation:
  • High volume at both peaks (April 30, May 1 selloff, July 29 selloff) suggest institutions exiting, not entering.
  • Low-volume recovery attempts signal weak conviction by new buyers.
• Current Participation:
  • Friday’s bar (July 31): Above-average volume accompanies a volatile session—heavy churn near $750–$765, suggesting a battle between short-term buyers and profit takers.

Step 3: Key Support/Resistance Levels (Daily and Intraday)

• Resistance:
  • $790–$800: Major resistance due to multiple failed rallies (July 14, 23–24).
  • $775–$780: Intermediate, support turned resistance.
• Support:
  • $740: Lows tested and defended multiple times (July 10, 31). If broken, opens door to $715 (earlier May lows).
  • $763 (Current Price): Right at a congestion/decision zone.

Step 4: Chart Patterns & Statistical/Pattern Recognition

• Descending Triangle (May–July): Lower highs and consistent support breaks suggest a bearish continuation pattern.
• Failed Breakouts and Bearish Engulfing (recent sessions): Suggest exhaustion on attempted rallies.
• Gaps and Reversals: Frequent large downward gaps (April, early May) still unfilled; suggests sustained overhead supply.

Step 5: Technical Indicators (EMA/SMA, RSI, MACD, ATR)

• Moving Averages:
  • 20/50-day EMA likely curling downward, with price below both (based on recent price action). No meaningful moving average support until sub-$750.
• RSI (14):
  • Estimated at ~35–40 after sharp drops and failed rallies: Not deeply oversold, so further downside remains plausible.
• MACD:
  • Negative histogram and lines diverging further after latest selloff, signaling short-term momentum down.
• ATR (Average True Range):
  • Significantly expanded. Recent meters of $30–50 intraday swings indicate increased volatility—typically bearish at the end of a trend unless met with strong buy volume, which is lacking.

Step 6: Order Flow, Market Sentiment, and Structural Considerations

• No evidence of strong bullish reversal candles or capitulation bottoms—recoveries are weak and sold into; selling pressure dominates the tape.
• Options positioning (implied, not direct):
  • Unlikely to support quick rebounds; the setup is favorable for gamma shorting or risk-reversal strategies given recent volatility expansion.
• Macro/sector considerations:
  • No data, but the chart shows this is LLY-specific, not a broad healthcare/biotech bounce.

Step 7: Probability for Next 24 hours – Scenario Forecast

• Dominant Scenario:
  • Rallies into $770–$780 will be sold (supply zone). Downside risk to $740, possibly $715 if panic resumes.
  • Bearish until decisive reversal pattern confirmed. Only a breakout/close above $780–$790 invalidates this thesis.

Step 8: Risk/Reward and Positioning

• Short Sell (Sell) Entry:
  • Current price ($763.28) is optimal near upper edge of today's broad range for opening a short position.
  • Initial target: $740 support (potential interim stop and exit for short).
  • More aggressive sellers can aim for $715 if $740 fails.
• Stop loss (not required in prompt, but logical): Above $780 (last swing high) to protect against unexpected reversal.

Summary & Decision: LLY's technical structure is decisively bearish: price is making lower highs/lows, recent rallies are sold, and the latest drop has come on major volume. Intraday, any buy spikes were reversed, with end-of-day closing near post-crash levels but under key moving averages. Volatility is an additional warning that forced liquidations may not be over. Since there’s no strong evidence of reversal, and supply dominates every rally, the optimal strategy is to short LLY near current prices, targeting the next clear support around $740.

Barring the emergence of an unexpected bullish catalyst, the probability over the next 24 hours favors fresh lows or a retest of $740, with continued resistance at $775–$780.