$Lucid Group (LCID.US)$ popped over 6% higher at one point Monday before running into a group of sellers, who knocked the stock down about 4% from the high-of-day ahead of consumer price index data set to be released Wednesday.

Since June 23, Lucid has surged about 40%, trading in an uptrend pattern between two parallel trend lines, which has caused an ascending channel pattern to develop. The pattern is bullish in the short term but can be bearish down the road.

For bullish traders, the "trend is your friend" (until it's not) and the stock is likely to continue upward. Aggressive traders may decide to buy the stock at the lower trendline and exit the trade at the upper trendline.

Bearish traders will want to watch for a breakdown from the lower ascending trendline, on high volume, for an entry. When a stock breaks down from an ascending channel, it's a powerful reversal signal and indicates a steep downtrend may be in the cards.

The Lucid Chart: On Monday, Lucid almost hit the top rising trend line of the channel pattern, where the stock rejected. Lucid then fell to test the lower ascending trend line of the channel and bounced up from the area.

• If Lucid closes the trading session near to where the stock opened the day, a doji candlestick will form, which could indicate the local top has occurred and Lucid will retrace on Tuesday. If Lucid closes the session near its high-of-day, the stock will form a hanging man candlestick, which could also indicate lower prices are on the horizon.

• If lower prices come on Tuesday, bullish traders want to see the stock continue to hold above the lower trend line of the channel. If higher prices come, bullish traders want to see the stock break up from the pattern.

• Bearish traders want to see Lucid break down from the channel on higher-than-average volume, which could indicate a longer-term downturn is in the cards.

• Lucid has resistance above at $8.35 and $9.84 and support below at $7.33 and $6.17.

Photo courtesy of Lucid Motors.