Thursday, October 8, 2015
GPRO GoPro Weekly and Daily Charts Oversold Falling Wedges Positive Divergence Lower Band Violations
MS (Morgan Stanley) downgraded GPRO yesterday but the company reaffirmed its guidance this evening. The hot dog vendor said he is short GoPro and he said his brother-in-law Frank, that trims the hedges in the park, just went all-in short. There are a lot of shorts in GoPro so any catalyst to the upside may create quite an upside launch. Reference the GPRO 2-hour chart posted this afternoon which Keystone was using to gauge an entry point. Keystone opened a new long position in GPRO today but it is a highly speculative and dangerous trade.
GPRO has crashed about -60% off its August top. No one likes or wants the stock as it prints an all-time low and threatens to lose its IPO price under 25. The daily chart shows positive divergence for all indicators. The MACD cross is positive. The green falling wedge is bullish. Stochastics and RSI is oversold looking for a rebound. Price has violated the lower standard deviation band so a move back to the middle band at 32 and dropping is on the table.
So the daily chart is set up for a bounce in price. The weekly chart shows the RSI, histogram, stochastics and money flow positively diverged over the last few months. However, the MACD line is weak and bleak and the histogram and RSI is flatish in the nearer term (September) so price likely wants to come back down again after any bounce occur. Price violates the lower band on the weekly chart so a move back to the middle band at 49 and falling is on the table.
The 33-ish level is upside price resistance. The middle band on the daily chart, which is also the 20-day MA at 31.98, call it 32, is an upside target. The projection is that GPRO will bounce due to the possie d on the daily chart so perhaps several days or a week or two of upside may finally provide relief for the beaten down GoPro; a short-covering rally may be quite dramatic. After the near-term rally, price will likely roll over again to the downside so you do not want to marry a long trade. The weekly chart is encouraging that a very firm and longer term bottom may occur in November. A strong bottom will be in once the MACD line bottoms and positively diverges on the weekly chart which is likely only a few weeks away.
Holiday sales may increase optimism with GoPro and the whole Chinese market remains untapped concerning action cameras. Perhaps GPRO will finally receive a relief rally after the two month bludgeoning. It will be an interesting trade to watch. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.