As discussed in the first part of this series, General Motors’ (GM) stock has largely traded on a positive note in 2016, outperforming peers (XLY) Ford Motor (F), Fiat Chrysler Automobiles (FCAU), and Toyota Motor (TM) on Wall Street.
But along with a company’s fundamentals, it’s also important for investors to be aware of its key technical support and resistance levels. Investors can use these support and resistance areas to refine their entries and exits from a company’s stock.
Key support and resistance
On December 20, 2016, GM stock was trading at $36.61. Previously, the company’s price was moving in a descending price channel for the last couple of years, as we can see in the chart above. In November this year, the price breached the upper range of this price channel with strong underlying momentum.
Below are some key support and resistance levels on GM’ stock price chart:
- The immediate horizontal resistance level for General Motors is $38.1, with a stiff swing resistance near $41.5.
- On the downside, the price may find immediate horizontal support near $33.9, with a major support level of 32.4.
Importance of technical price levels
Upward stock price movements may see resistance around the resistance levels and downward price movements may hit a roadblock around support levels. A breach of support or resistance, however, could trigger a sharp price action. This means the price typically witnesses a sharp rally if a key resistance area is violated, or a sharp fall if a key support level is violated. In both cases, investors could initiate a favorable position or manage their existing position to benefit from these price levels.
In the next and final part of this series, we’ll discuss what Wall Street analysts are currently recommending for GM’s stock.