The Key Takeaways
- GameStop’s shares are likely to remain at the forefront of attention on Monday, ahead of its eagerly awaited earnings report due on Tuesday. Recent meme-driven trading will also be a factor.
- The stock's price formed a bullish engulfing pattern following a minor pullback on above average-trading volume.
- Investors should watch key overhead price areas on GameStop's chart around $31 and $40.50, while also monitoring important support levels near $23 and $19.50.
GameStop shares (GME) will remain the focus on Monday as the retailer prepares to release its highly anticipated earnings report on Tuesday. The spotlight is likely to be on GameStop after a recent post made by social media influencer “Roaring Kitty” Keith Gill sent stock prices soaring in the last week.
Wedbush, a leading investment company, reiterated Friday its commitment to the upcoming elections. “underperform” GameStop has been given a rating of “buy” and a price target of $10. This is despite the fact that digital games and commerce are causing accelerated growth.
GameStop shares have risen more than 65% since the beginning of this year, according to Friday’s closing price. The majority of these gains came in May and in June when Gill made several posts about the retailer. This was the first post since Gill was involved in a meme-trading frenzy in the pandemic era that gripped GameStop stock late in 2020 and in early 2021.
Here, we analyze the chart of GameStop and point out several price points to keep an eye on as GameStop prepares for its upcoming quarterly results.
Bullish Engulfing Pattern After Pullback
GameStop has continued its upward trend since it broke out of a descending triangular formation late in October.
In recent weeks, after a slight pullback in the trading volume above the average ahead of the quarterly report from the retailer, the price has formed an engulfing bullish pattern.
The relative Strength Index (RSI), which confirms a positive price trend with a reading of above 60 but is still below the overbought zone, gives ample room for the stock to rally.
On GameStop’s chart, let’s look at a few important overhead levels to be on the lookout for. Also note a couple key support levels which may become relevant during retracements.
Keep an eye on the key areas of overhead costs
The shares could test the key overhead resistance at $31, where there may be selling pressure. This level is near the trendline connecting last month’s high swing price with the range of prices during the meme driven volatility in May and June.
A breakout of this price could fuel an upswing to $40.50. Investors who purchased stock below the current price could look to unload their shares.
Watch for Important Support Levels
Investors are advised to keep a watchful eye on $23 during retracements. Bulls of GameStop could look for buying opportunities near the multiple peaks that appeared on the chart between May and October.
A fall of around $19.50 is possible if you decide to sell your stock below this point. On the chart, this level is likely to attract buyers as it lies near an important line which links the September 20,23 countertrend low and several swing bottoms between May and September.
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