After a sharp reversal to the downside on August 1st, the General Motors Stock (NYSE: GM) continued to move lower, until it found support near the 35.50 hurdle. That hurdle helped the stock to rebound, but as we can see, the price is struggling to move above its key resistance barrier at 37.60. If that area continues to keep GM from moving higher, the stock may resume its slide. Let’s not forget that, overall, the share price is still balancing above its medium-term tentative upside support line taken from the low of December 26th. Given the fact that there is still quite a distance between the current price and that upside line, we still have the possibility of seeing GM traveling towards that line for a quick test, hence why we will stay cautiously bearish, at least in the short run.
A price-drop back below the 36.60 hurdle, which marks the inside swing highs of August 26th and 27th, could open the door for a further slide towards the previously mentioned 35.50 zone. That zone may stall the price again, but if it eventually fails to withstand the downside pressure, a break of it could lead GM to the 34.45 mark, which is the low of June 6th, or the stock may end up testing the aforementioned upside line. That line might provide some additional support for GM.
Currently, our oscillators, the RSI and the MACD, seem to be giving a bit of hope for the buyers. The RSI, after bottoming in the end of August, had moved slightly higher. The MACD is also showing some good signs for the buyers, as it started slowly moving to the upside. That said, the RSI is still struggling to push above 50 and the MACD is still running below zero. This is why for now, we will not put too much emphasis on our indicators, but instead, focus more on our potential breakout levels.
On the upside, if the price rises above the previously mentioned 37.60 barrier, this could confirm a potential inverted head-and-shoulders pattern on the 4-hour chart. If so, we will initially aim for the 38.25 obstacle, or even for the 38.65 hurdle, marked near the lows of July 16th, August 5th and 12th. If the stock gets a hold-up around there, it may correct back down a bit. But as long as it remains above the 37.60 zone, we will aim further north. Another strong push might lift the price above the 38.65 area and clear the way to the 39.60 level, marked near the high of August 13th.
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