Shares of Gamestop (GME) are about to break above the rim line of a 2 years cup and handle pattern, and their 4 day moving average. This pattern projects a price target that closes the gap and takes the stock back to $50 levels.
But what is Cup and Handle technical chart?
The cup and handle is a pattern of bullish continuation that marks a period of consolidation followed by a breakout. It was developed by William O’Neil and introduced in 1988 in his book How to Make Money in Stocks.source
Some news to have in mind regarding GME stock and why cup and handle breakout could happen.
Gamestop yesterday announced early redemption of $125M their 2021 senior notes, In layman language this means that they have enough funds on their hands to prematurely pay off their dept.
How come GameStop now, all of a sudden, have enough cash when everyone was talking about GameStop bankruptcy in recent years? Well, according to their Q2 presentation, GameStop’s global E-commerce sales delivered an 800% increase. Gamestop is a company that is moving away from brick and mortar store business to digital business.
On the other side, historically, October, November and December delivered the biggest spikes when it comes to GME stock. This happened on several occasions in the last 10 years. Why is that? Because Black Friday and Christmas. People are spending more and with stay at home orders and COVID-19 still around killing people we can expect a surge in digital presents.
So, all in all, everyone expects a record Q4 profits in gaming industry. Will this move GME stock to the new all time high or…nowhere?