Why GameStop Stock Looks Ready To Break Out

GameStop Corp. GME shares were trading higher Tuesday after the stock pushed higher alongside other popular Reddit stocks.

Traders in the WallStreetBets forum are pushing AMC Entertainment Holdings Inc. AMC and GameStop shares higher, among other stocks popular on Reddit.  

GameStop was up 3.73% at $217 Tuesday afternoon. 

GameStop Daily Chart Analysis

• GameStop shares bounced off support and have been heading higher inside of what technical traders call a pennant pattern.
• The price is nearing the end of the pennant pattern after being condensed between narrowing highs and lows for months. The stock may be ready to see a break in the coming weeks.
• The stock is trading above both the 50-day moving average (green) and the 200-day moving average (blue), indicating the sentiment in the stock has been bullish.
• Each of these moving averages may hold as a possible area of support in the future.
• The Relative Strength Index (RSI) has been climbing higher recently and now sits at 69, right on the verge of being overbought. A breakout with a high RSI could cause a large price movement.

What’s Next For GameStop?

Bulls would like to see the stock continue to move higher and eventually break out above pattern resistance. Bulls are hoping to see a breakout above the pattern resistance followed by a large upward move. Bulls then would like to see a period of consolidation where the stock can hold the gains it made from the breakout.

Bears would like to see the stock begin falling and break below the pattern support. If the stock can hold below this area, the price could see a further dump lower.