- Gamestop shares run out of steam on Friday.
- GME shares staged an explosive rally on Thursday, up 52%.
- GME found support at the 50 day moving average.
Gamestop ran out of steam on Friday after an explosive Thursday. GME closed on Thursday up over 50% but Friday saw a more modest day closing down 1.5% at $181.
A quick little recap! GameStop is a struggling online video game retailer with shops located all around the world selling – yes, you guessed it – video games. As we all know, retail is a struggling space as online continues to take over, and this has been a trend for GameStop too. As a result, Gamestop was heavily shorted by hedge funds as they bet that the price would decline further. That’s when the fun began with retail traders on Reddit’s r/WallStreetBets forum mobbed the stock and moved the shares to nearly $500 in January, before sliding back to sub-$50 by mid-February and now currently trying to hold $200.
GME stock news
Traders loaded up on the 50 day moving average support on Thursday and GME shares rallied nearly 60%. It was a brave move going against the trend. GME shares had been under pressure following the release of mixed Q4 results and a lack of guidance. Gamestop had also been rumoured to be considering a capital raise. This all combined to send GME shares sharply lower post results. The shares dropped 6% prior to the results and 33% on the next trading day as the results were posted after the close on March 23.
The 50 day moving average support was rapidly hit at circa $120. GME closed the session on March 24 at $120.34. However short term and retail traders sensed an opportunity and bought GME shares aggressively straight from the open the next day, in the end causing a huge gain of over 50%. Friday saw calmer trading but Gamestop did hold those gains suffering only a minor 1.5% loss.
GME technical analysis
Currently, we have traded up to some key short term resistance levels. The short term 9 and 21 day moving averages are converging at or near $190. Gamestop is currently trading $182.50 in pre-market trading. Failure to sustain the price action above these short term moving averages is a bearish signal. A break of Thursday close at $183.50 would also add to bearish sentiment. If these levels hold the first target to the upside is the $200 psychological level and $218.75, Fridays high.