High Flying Financial Goldman Sachs GS Falls from the Highs

Jan 18, 2017: 1:20 PM CST

Stocks that are high-flyers run the risk of crashing back to earth.

Goldman Sachs (GS) – a supremely strong stock – plunged $15 from the new highs and is on an expected – if not overdue – sell pathway lower.

Let’s pinpoint the chart pattern and note the key levels in play right now for GS:

After the November Election, financials stocks surged to the front of the market in terms of relative strength.

Money flowed into the financial sector and Goldman Sachs (GS) benefited strongly from this money flow.

Shares surged from $175 to peak under $250 here in January.

However, a lengthy sideways pattern and negative divergences in December set the stage for the January fall.

The breakdown under the support of the rising 20 day EMA ($240) sets the stage for a fall toward the rising 50 day EMA into $225.

Here’s the pattern and development of the divergences and current plunge from the highs:

A “Bearish Rising Wedge” price pattern – along with negative momentum and volume divergences – set the stage for a likely tumble from the highs.

While price remained pinned at the highs longer than expected, gravity (selling pressure) eventually caught up with the bulls as a liquidation (selling) phase overpowered buyers.

Again, focus on the Daily Chart for lower targets as this event continues.

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Corey Rosenbloom, CMT

Afraid to Trade.com

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