GameStop Corporation (NYSE: GME) saw a notable surge in the latest session, jumping 13%. The gains continued in pre-market trading on May 10, fueled by growing interest from bullish investors and short sellers.
Despite the absence of any major company news, the technical analysis reveals that GameStop has formed several compelling chart patterns. This development has sparked a surge in interest in the stock, with some even speculating the likelihood of another short squeeze.
Technical analysis of GME stock
GameStop stock has been on an upward trend, hitting a recent high of $17.45 on May 3 and a higher low of $10.70 on May 1. This surge, around 48% between May 2 and May 3, brought the stock back above its 200-day simple moving average (SMA), where it has since consolidated.
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This consolidation has formed a bull flag and a quadruple inside bar pattern above a crucial support zone near $15.20, coinciding with the 200-day SMA. Both patterns indicate bullish sentiment, with a potential breakout towards the $24 mark if GameStop breaks above the upper trendline of the bull flag on high volume.
Conversely, bearish traders are eyeing a breakdown from the bull flag, dropping below the 200-day SMA and the 8-day exponential moving average. This would suggest a reversal, although bullish traders would look for a higher low to confirm the uptrend.
Currently, GME stock is in oversold territory, with the relative strength index (RSI) around 75, suggesting a consolidation or a slight decline could bring it to a more balanced level. Resistance levels lie at $18.58 and $20.10, while support is between $16.20 and $13.36.
GME’s short-interest isn’t as high as thought
Despite GameStop stock having a short interest below the 20% threshold, typically considered very high, and a positive change of -8.74%, the stock isn’t seeing the expected volume of short interest from traders.
With the next earnings call scheduled for June 22, it remains to be seen how high GME shares can soar before the earnings report.
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