Benzinga - GameStop (NYSE:GME) Corporation (NYSE: GME) surged almost 13% at one point on Wednesday after rallying 8.5% on Tuesday.
The upward momentum is taking place two years after GameStop set off on its first historic rise, which started on Jan. 13, 2021 and ultimately brought fame to the stock and thrust retail traders and hedge funds into the spotlight.
During that massive pandemic-era squeeze, GameStop skyrocketed 2,311% to reach an all-time high of $120.75 on Jan. 28, 2021, prompting trading platforms such as Robinhood (NASDAQ:HOOD) Markets, Inc (NASDAQ: HOOD) to restrict trading.
The fiasco eventually landed Robinhood and Citadel Securities in front of Congress, where controversial practices such as payment for order flow were investigated.
Although GameStop has enjoyed some smaller short-term surges since January 2021, the stock has fallen in both price and popularity.
The lower share price is also due, however, to a 4-for-1 stock split, which came into affect on July 22 and cut the stock’s price by one-quarter.
Although there are no signs that GameStop is teeing up to set forth on another trip to the moon,
the stock is flashing signals a larger reversal to the upside could be on the horizon.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
The GameStop Chart: On Wednesday, GameStop broke up bullishly from a descending channel pattern that had been holding the stock down since Dec. 6.
GameStop was unable to hold above the 21-day exponential moving average, which caused selling pressure to drop the stock back down toward the opening price.
- The spike higher caused GameStop to negate the downtrend, which had been taking place with the falling channel formation.
- Although the downtrend has been negated, the stock hasn’t confirmed a new uptrend on the daily chart with the formation of a higher low.
- If GameStop closes the trading day with a significant upper wick, the stock will print either a shooting star or gravestone doji candlestick, which could indicate lower prices will come on Thursday.
- If that happens, bullish traders will want to see GameStop eventually print a bullish reversal candlestick, such as a doji or hammer candlestick, above $15.50 to confirm an uptrend.
- The next most likely scenario is that GameStop will form an inside bar pattern on Thursday to consolidate Tuesday’s and Wednesday’s surge north. The pattern would lean bullish because GameStop was trading higher before forming the inside bar.
- GameStop has resistance above at $19.44 and $21.89 and support below at $15.41 and $10.16.
Photo via Shutterstock.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.