General Electric's Technical Outlook: Bearish Until Proven Otherwise

For years, General Electric Company GE investors have been waiting on a reason to get bullish about the stock’s technical outlook. Unfortunately, the trade war sell-off this week has thwarted the stock’s latest attempt at a technical breakout to the upside, and GE shares appear to still be stuck in their long-term bearish trading pattern for the time being.

Tight Trading Range

The red resistance line in the chart below represents the key long-term bearish resistance level that GE can’t seem to get past. After a double-bottom at $6.50 back in December 2018, GE rallied hard in the opening months of 2019, reaching as high as $11.28 in February.

Since that time, the stock has twice pulled back to support at the $9 level, but the failed breakout in February coupled with a second failed breakout earlier this month suggests that pesky bearish resistance line is still dictating the trading action for now.

In the near term, GE is forming a bearish descending triangle pattern, in which the share price is getting pinched between horizontal support at $9 and descending resistance, currently at around $10.25. Unfortunately for GE bulls, the descending triangle typically suggests a bearish breakdown is coming at some point, especially when it occurs within a longer-term downtrend. The triangle pattern is often formed during a consolidation period after a stock has declined steeply in a short period of time.

GE shares fell 44 percent in the second half of 2018.

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Key Levels

In the near term, GE traders can expect the stock to at least re-test the $9 support level in coming days. If it bounces from there, expect near-term upside is limited to around $10.25.

A breakout above $10.25 on heavy volume would be a very noteworthy and bullish development. A continuation to February highs of $11.28 could at least be confirmation that the December lows of $6.50 are the ultimate bottom for GE.

If the descending triangle pattern does, in fact, result in a breakdown below $9, the $6.50 level is the last potential support level keeping GE from making fresh lows in the longer-term.

GE's stock traded at $10 per share at time of publication.

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Photo credit: Momoneymoproblemz, via Wikimedia Commons