GameStop (GME) shares experienced a significant drop in premarket trading on Wednesday following the announcement of a 20 million share offering and a 31% decline in quarterly sales. This decline can be attributed to the ongoing shift from physical discs to digital downloads and game streaming. The stock, which gained popularity during the meme stock frenzy, has seen substantial price fluctuations this year due to the influence of trader Keith Gill, also known as “Roaring Kitty.”
At the time of writing, GameStop shares were down 13% at $20.40, just before the opening bell. Investors are now closely monitoring the technical analysis of GameStop’s chart to identify key post-earnings price levels.
Symmetrical Triangle Breakdown Taking Shape
GameStop shares have been oscillating within a symmetrical triangle since the meme-driven volatility subsided in early June. Bulls have successfully defended the lower trendline of the pattern twice in August. However, a three-day winning streak up to the triangle’s top trendline abruptly ended on Tuesday, indicating uncertainty ahead of the company’s quarterly results.
The projected earnings-driven drop on Wednesday opens the possibility of a breakdown below the symmetrical triangle pattern.
Key Price Levels to Watch
If a breakdown occurs below the lower trendline of the symmetrical triangle, investors should pay attention to three important price levels. The first level to watch is around $18.50, where the shares may find support near the 200-day moving average and several peaks and troughs from September 2023 to August this year.
A failure to hold above $18.50 could result in a further decline to $15.25. At this level, investors may seek entry points near a trendline that connects a period of narrow consolidation on the chart between January and March.
If selling pressure continues, the stock could decline to $13.25, which is approximately 43% below Tuesday’s close. This level is likely to attract buying interest as it aligns with a range of comparable lows on the chart from October to March.
Meme-Fueled Bullish Target
Despite the potential for a meme-fueled rally in GameStop shares, it is important to keep an eye on the $30.50 area. At this level, retail traders who bought at lower prices may be inclined to book profits near the May 13 gap close and a series of similar trading levels in mid-June.
It is crucial to note that the comments, opinions, and analyses expressed in this article are for informational purposes only. Investors should conduct their own research and analysis before making any investment decisions.
In conclusion, GameStop shares have experienced a significant drop following the announcement of a share offering and a decline in quarterly sales. Investors are closely monitoring the technical analysis of the stock’s chart, particularly the potential breakdown below the symmetrical triangle pattern. Key price levels to watch include $18.50, $15.25, and $13.25, while the $30.50 area may serve as a bullish target during meme-fueled rallies.
