GM has a lot of downside potential left
General Motors is an American company headquartered in Detroit, Michigan, which builds and sells cars. Based on global sales GM is one of the biggest car manufacturers in the world.
In the following technical analysis we will take a look on the downside potential of GM.
The downtrend began to accelerate since end of June which brought this stock to our attention.
GM daily chart (5 years)
Source: ATT Trading
Management and risk description
In this short trend since June GM crossed the simple 200-day moving average 200 high volume. Because of the big correction since the last low at $24.82 we have lucrative targets.
When the stock begins to show weakness in the correction zone (figure2) we can enter a short trade on a smaller trend size. Even if we wait for a clear short signal on that smaller trend size we would still have a lucrative target (figure 2, target 1). The black arrows show one possible development of the stock in the near future.
At target 1 you should consider a big partial take profit and more profit should be seen as a bonus. One possible target for the second part of our position could be the target 2 at $19.
If GM leaves the correction zone at the upper side, our short scenario is over and you could consider a long trade.
GM daily chart
Before any trade it is always necessary to look for news e.g. company earnings.
And this week it is also necessary to wait until the FOMC meeting is over.
Target: $25.00, $19.00
Time horizon: medium-term
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more