GameStop Stock Needs A Bounce Or Things Could Get Ugly

GameStop Corp. GME shares are trading lower Wednesday after retail traders moved the stock. GameStop still remains a popular stock in Reddit’s WallStreetBets community. The stock nears support in a pattern on the chart.

GameStop was down 5.28% at $169.12 at last check Wednesday.

GameStop Daily Chart Analysis

• Shares have been forming into a pennant pattern since early 2021 and are nearing the potential support line in the pattern.
• The stock is trading below the 50-day moving average (green), but above the 200-day moving average (blue), indicating the stock is likely facing a period of consolidation.
• The 50-day moving average may hold as an area of resistance, while the 200-day moving average may act as a place of support.

Key GameStop Levels To Watch

• The pennant pattern began forming in early 2021, and the price has fallen to a level where it may find support soon.
• The price has been condensed between narrowing highs and lows, and has recently fallen toward pattern support formed by connecting the lows. The stock may need to see a bounce soon or it could break out of the pattern.
• The Relative Strength Index (RSI) has been floating below the 50 level for a couple of months, unable to cross into overbought or oversold territory. The RSI sits at 39 as of Wednesday before market close.

What’s Next For GameStop?

Bulls would like to see a bounce at the support level and an upwards move following. Bulls would then like to see the stock form higher lows and head toward the pattern resistance. A break above pattern resistance could send the stock moving higher.

Bears would like to see the stock break out of the pattern below the pattern support. If the stock saw a drop below the pattern support and had a period of consolidation below, then it may see a further bearish push.

Photo: Sergei Tokmakov www.thecorporateattorneys.com from Pixabay