What you need to know
- GE Vernova’s shares rose 5% Wednesday after the company raised its sales forecast for long term, announced a dividend, and unveiled a plan to buy back stock.
- On Tuesday the stock fell below the downward trendline in an ascending triangular pattern. However, it reversed intraday and closed back inside the pattern on Wednesday, creating what could be a “bear trap”.
- Investing in important areas between $355 and $405 is crucial, as are key levels of support near $295 or $258.
Shares of GE Vernova (GEV), the maker of energy equipment, soared on Wednesday after it raised its sales forecast for long-term.
It also announced that it would be paying a quarterly dividend of $0.25 and buying back $6 billion worth of stock.
Since GE Vernona was spun off from GE Aerospace on April 2, as part of the three-way split of General Electric, GE Vernona’s shares have doubled. This is due to the surge in demand for electrical grids, gas turbines, and other equipment that generates power for data centers for artificial intelligence.
The stock closed at around $344 on Wednesday, a gain of 5%.
After the company’s latest financial report, we will use technical analysis and a close look at GE Vernova’s graph to determine important levels of price.
The Ascending Triangle is in Focus
After peaking in November, GE Vernova’s shares consolidated in an ascending triangular pattern before crashing below its lower trendline during Tuesday’s session.
Today, however, shares performed an intraday turnaround to return back into the triangle, with their highest volume of trading since early June. In the process, they may have created a “bear trap”.
Moreover, after several successive lower readings the relative strength (RSI), signaled an improvement in price momentum.
Watch out for two important support levels and overhead areas.
Important Overhead Areas Watch
Amid further buying, investors should watch how the stock's price responds to the $355 area, a region on the chart where it may encounter selling pressure near the ascending triangle's top trendline.
Investors can project a target price above the record high of the stock by using the “measuring principle”, a technique which analyzes past price movements to predict future changes.
In order to apply this tool to GE Vernova’s chart we need to calculate the distance from the two ascending triangle trendlines at their largest point, and then add the amount calculated to the top trendline of the pattern. This time, we added $45 to $355 to project a target price of $400. Those who purchased the stock earlier could lock in their profits.
Monitoring Key Support Levels
This is where you should be looking for the lower levels. This area is currently located just below 50-day moving averge and could provide some support around the low of an engulfing chart pattern that was formed at the top of trend between August to November.
Selling below this level could lead to a drop down to $258. This is a chart area where shares may attract interest from buyers near the cluster of candlesticks around the peak in September.
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According to the article, as of its date of publication, the author did not possess any of these securities.
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