The Simple but Important Support Line to Watch in Goldman Sachs GS

Apr 15, 2011: 2:47 PM CST

Goldman Sachs (GS) appears to be in trouble before Congress again – or at least before a Senate panel.

What might that mean for the stock?  Or more specifically, what current price level should we be watching as a critical pivot level between buyers and sellers?

Good question!  Here is the simple but critical short-term pivot level to watch in GS share prices:

Getting right to the point, it’s the $155 area which is a prior price pivot level (important) and the 38.2% Fibonacci retracement as drawn ($155.09).

Taking it a step beyond, the 200 day simple moving average – a key refernence point between buyers and sellers – rests just above at $157.11.

Notice how price held the 200d SMA as support in March and then snapped under it yesterday as news (Thursday) broke that Senator Carl Levin suggested Goldman Sachs may have misled investors and Congress.  Ouch.

News aside, the chart-based “IF/THEN” statements seem to play out this way as the chart stands right now:

“IF the confluence support at $155 holds, THEN all is well with price.”

However, “IF sellers push price under $155, THEN look for an immediate decline to test the next support zone at $150.  Anything under $150 puts shares  on a collision course for downside targets $142.50 then $135 (simple prior price lows).

For fun, I’ve also drawn a potential Head and Shoulders pattern formation with neckline at $155 or $150 depending on your criterion (strict or not so strict).

If we take the H&S Neckline at $155 here, then to get the Price Pattern Projection Target, we take the distance from the top of the Head ($175) to the neckline ($155) for a distance of $20.00.

We would then subtract that $20 from $155 to arrive at a downside target $20 lower at $135.

Magically, that also happens to correspond with the August 2010 low which is already a distant downside target as mentioned above.

So for now, watch $155 in Goldman Sachs (GS) very closely – failure for buyers to hold this level opens the door to $150, $142.50, then a full H&S target to $135.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

4 Comments

4 Responses to “The Simple but Important Support Line to Watch in Goldman Sachs GS”

  1. Goldman Sachs Stocks- To Buy or Sell, That Is The Question | eWallstreeter Says:

    […] Afraidtotrade.comclick here for charts Goldman Sachs (GS) appears to be in trouble before Congress again – or at least before a Senate […]

  2. plumbing Says:

    I like how you emphasized the rates
    It should really be overshadowed by the items.

  3. Double Glazing Says:

    This is a very helpful post. Thanks a lot for posting a good visual presentation of the data. Good job.

  4. Jainaf Says:

    This is a nice
    content.This provide the information that the best part is that you’ve
    created a line that acts as support.I like this one.Thanks to share this blog
    with us.Keep it up.I will keep share in future.