Benzinga
Published Oct 04, 2022 18:13
Updated Oct 04, 2022 19:11
GameStop Surges Higher On Recognition Of This Bullish Pattern: Here's What To Watch
GameStop Corp . (NYSE: NYSE:GME) was spiking up more than 8% on Tuesday, in tandem with the S&P 500, which gapped up and continued to surge about 2.8% intraday.
The gaming retailer looked set to bounce regardless of the bullish price action in the general market because GameStop formed a triple bottom pattern on the daily chart.
A double bottom pattern is a reversal indicator that shows a stock has dropped to a key support level, rebounded, back-tested the level as support and is likely to rebound again. It is possible the stock may retest the level as support again creating a triple bottom or even quadruple bottom pattern.
The formation is always identified after a security has dropped in price and is at the bottom of a downtrend whereas a bearish double top pattern is always found in an uptrend. A spike in volume confirms the double bottom pattern was recognized and subsequent increasing volume may indicate the stock will reverse into an uptrend.
The GameStop Chart: GameStop formed a triple bottom pattern near the $24 level on Sept. 23, Sept. 26 and Oct. 3. On Monday, the stock began to react to the pattern, rising up off the low-of-day to print a bullish hammer candlestick on the daily chart, which indicated the stock was likely to trade higher on Tuesday.
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