Lemonade (LMND Quick QuoteLMND - Free Report) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, LMND broke through the 20-day moving average, which suggests a short-term bullish trend.

The 20-day simple moving average is a well-liked trading tool because it provides a look back at a stock's price over a 20-day period. Additionally, short-term traders find this SMA very beneficial, as it smooths out short-term price trends and shows more trend reversal signals than longer-term moving averages.

Like other SMAs, if a stock's price is moving above the 20-day, the trend is considered positive. When the price falls below the moving average, it can signal a downward trend.

LMND could be on the verge of another rally after moving 13.9% higher over the last four weeks. Plus, the company is currently a Zacks Rank #2 (Buy) stock.

The bullish case solidifies once investors consider LMND's positive earnings estimate revisions. No estimate has gone lower in the past two months for the current fiscal year, compared to 6 higher, while the consensus estimate has increased too.

Investors should think about putting LMND on their watchlist given the ultra-important technical indicator and positive move in earnings estimate revisions.