Lennar Corporation’s stock jumped over 8.5% due to news about President Trump’s mortgage bond plan. This increase prompts us to analyze the stock’s chart, which shows an inverse head and shoulders pattern.

Bullish Stock Patterns

This pattern is a strong bullish signal, developed gradually over time. The neckline connects price movements starting from October 18, 2024, through significant highs in October and September of the previous year, and into November. A clear neckline enhances the pattern’s quality and potential. If the stock price breaks and stays above the neckline, it could rise by over 50%, based on the pattern’s analysis. Lennar Corporation is a major U.S. homebuilder, drawing attention due to its influence, especially in light of macroeconomic news affecting the housing market. However, no pattern is perfect, and it’s crucial to confirm the setup. Managing risk is vital to protect your investment. Patterns can fail, and market conditions may change, so traders must balance confidence with caution. Following Lennar’s recent 8.5% jump, we closely monitor its price action as we enter the week of January 12, 2026. This increase aligns with renewed hopes for a mortgage bond plan that could decrease borrowing costs for homebuyers. This fundamental news is now influencing a significant long-term technical pattern that has formed over the past year.

Long-Term Technical Analysis

We’ve identified a clear inverse head and shoulders pattern on the chart, established since the lows of 2024. The neckline links the highs from October 2024 and various peaks from last year’s 2025, marking a key resistance level. A confirmed break above this level could lead to more than 50% upside from where the stock breaks out. Recent economic data supports the potential breakout. The national average for a 30-year fixed mortgage has decreased from around 6.5% in the fourth quarter of 2025 to 6.2%, in anticipation of the new policy. Additionally, last week’s homebuilder sentiment index unexpectedly rose to 52, crossing the important 50-point mark for the first time in six months, indicating industry optimism. For derivative traders, this setup encourages preparing for a potential breakout in the coming weeks. We are considering out-of-the-money call options, particularly with March and April 2026 expirations, which offer leverage if the stock rallies. A bull call spread may also be a good strategy to define risk while capturing some of the expected gains. Staying disciplined is key, as no pattern is foolproof. The critical trigger is not just a brief touch of the neckline but a decisive daily close above it, ideally with continued buying the following day. A quick rejection from this area would invalidate the immediate bullish outlook and indicate it’s too soon to make directional trades. We should also be aware of the increased implied volatility following the stock’s recent strong movement, which raises options prices. We will wait for a confirmed breakout before considering this premium. If the price fails at the neckline, it’s a clear signal to step back and protect your investment. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now