Buy or Sell GameStop on Earnings? Here's the Level It Must Hold

GameStop is falling on earnings but it's got one notable support level to hold. Let's look at the charts to plot the roadmap.
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The volatility in GameStop  (GME) - Get Report remains high, with shares down 13% and hitting new session lows.

The moves came after the company reported earnings and in the midst of a strong rally for “meme stocks.”

Only this time, GameStop isn’t the leader of the meme-stock movement. One could argue that the crown belongs to AMC Entertainment  (AMC) - Get Report, while a whole host of new stocks has been thrown into the mix.

GameStop stock has been jumping around a lot lately, but apparently the quarterly report isn’t doing much to spark a squeeze higher.

The company reported a loss for the quarter, while a looming Securities and Exchange Commission probe has investors opting for a conservative stance rather than an aggressive one.

What do the charts look like after the post-earnings fade? Let’s look.

Trading GameStop

Daily chart of GameStop stock.

Daily chart of GameStop stock.

In late May and early June, GameStop stock traded up to the $280 to $300 zone. That was after a breakout over the $210 to $215 area.

However, this zone continued to act as resistance, just as it did back in March. While GameStop was able to break out over $300, it didn’t do so in a convincing fashion.

By that, I mean its rallies into the mid-$350s were unable to last throughout either Tuesday or Wednesday’s trading sessions. They both faded back toward the $300 mark.

While shares were technically above $300 resistance, there was reason to be hesitant on the long side. At the same time, it’s clear what a bullish reaction could have done to this stock, putting $350-plus in play.

Currently, we’re getting the first correction to the 10-day moving average in 11 sessions. While this moving average has been guiding the stock higher, it hasn’t been tested since GameStop’s massive breakout over $212.

Now that we’re there, aggressive bulls may look for a bounce. If we get it, the $280 to $300 zone has to be on watch. Admittedly, it’s a wide zone, but one that must be respected.

If GameStop stock gets above $300, the $345 to $350 area could be in play after that.

On the downside, keep a close on the 10-day moving average. A close below it could put the 21-day moving average on the table. Below that and the $212 breakout level will be back in play.

The levels for GameStop are not that hard to figure out. It’s the emotional baggage that comes with trading such a volatile stock with wide ranges. In that sense, this stock certainly is not for everyone.