Watch Out for These Levels in GameStop's Stock Price
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Source: TradingView.com
Key TakeawaysGameStop shares have traded within a symmetrical triangle since mid-May, a chart pattern that suggests a continuation of the current uptrend.A measured move of the symmetrical triangle pattern forecasts an upside price target in GameStop shares of $95.However, a breakdown from the pattern could see the price revisit support around $16 near a multi-month downtrend line that sits in close proximity to the 50- and 200-day moving averages.
Retail traders’ favorite meme stock, GameStop (GME), is likely to remain in the spotlight on Monday after a wild finish to trading last week spurred by social media posts and unexpected news announcements.Since roaring back to life last month following social media meme-stock influencer Keith Gill—better known as "Roaring Kitty"—making his first post about the retailer after a three-year hiatus, GameStop shares have continued to exhibit heightened volatility. The stock soared more than six-fold between late April and mid-May before promptly falling around 70% in eight trading sessions as investors rushed to lock in profits.More recently, the price has regained its upward momentum after the 50-day moving average (MA) crossed above the 200-day MA to generate a bullish golden cross buy signal. Increasing volume has accompanied the stock’s latest upward movement, indicating growing interest from market participants, mostly likely from an army of retail traders trying to catch short-term price fluctuations.Symmetrical Triangle Pattern FormsThe shares have traded within a symmetrical triangle since mid-May, a chart pattern that suggests a continuation of the current uptrend. To project an upside price target, investors can measure the widest portion of the triangle in dollars and add that amount to the pattern’s top trendline. For instance, adding $50 to the breakout point at $45 forecasts a price target of $95.However, given the unpredictability of meme stocks, there’s also a high probability the shares could break down from the pattern. In such a scenario, investors should keep a close eye on the $16 level, an area on the chart the price would likely find support near a multi-month downtrend line that sits in close proximity to both the 50- and 200-day MAs.Earnings Release, Share Sale Surprised TradersGameStop caught investors by surprise late last week by unexpectedly releasing its quarterly results and announcing the additional sale of stock, sending its shares plunging nearly 40% on Friday, followed by a drop of more than 3% in extended-hours trading.These factors, along with further social media posts and commentary from “Roaring Kitty" this week, will likely influence GameStop shares’ next move.The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.As of the date this article was written, the author does not own any of the above securities. Read the original article on Investopedia.
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