NEW YORK (TheStreet) -- Goldman Sachs (GS) - Get Report shares are falling Thursday after the bank announced second-quarter earnings took a hit because Goldman had to set aside $1.45 billion for mortgage-related litigation.

Don't expect the stock to recover anytime soon. In fact, comprehensive technical analysis shows it's poised for a precipitous decline.

The stock hit a multiyear high of $218.77 late last month, but that was a rare peak as the stock was testing the upper three-standard-deviation band near $220. 

This statistical extreme (containing 99.7% of normality) created a euphoric state for investors, leading the crowd to ignore that the stock had been trading above the upper two-standard-deviation band (containing 95% of normality) for the previous month. (Around midday Thursday, the stock was down $2.95, or 1.4%, at $210.01.)

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The weekly bar chart above shows that past probes above the upper two-standard-deviation band have on average led to 15% declines in the past. So it was foolish for investors to expect the stock to be able to remain near the upper three-standard-deviation band for any length of time.

Within the past few weeks, prices have reversed sharply, broken back below the upper two-standard-deviation band, bounced to test the underside of that band (for the second time in this month) and are now falling away in a hurry. 

These bounce-back tests of a previously broken resistance level are what some analysts call the "kiss goodbye." Combined in the pattern above is likely the "kiss farewell," according to the Decision Support Engine.

If you look at the stochastics study, in the lower pane, you can see the most dramatic bearish divergence of the past three years. In the last couple of months, higher highs in price diverged with lower highs in stochastics. The angle of divergence was steeper than it was in the two instances in 2014.

Combined, these two DSE components, of the many within the DSE algorithm, suggest the current decline in the price of Goldman Sachs stock has a ways to go before shares find reasonable support.

The blue arrows on the right-hand side of the chart show how the decline could shape up in coming months. Regardless of the actual path, the yellow box between $167 and $179 highlights the highest value target for the destination. 

It's likely that the stochastics will become oversold around the time that price visits this price zone.  If accurate, price will also meet the lower two-standard-deviation band within this zone, and the DSE will likely warn that investors should stop selling Goldman Sachs and begin buying.

Although the stock isn't expected to move back above $215, such a move would postpone the bearish forecast.

Barring that, though, the analysis is clear: The stock is headed lower in coming months.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.