Shares of GoPro Inc (NASDAQ:GPRO) rallied about 12.5% on Thursday as the company reported it had lost less money than forecast in the most recent quarter.
While GoPro still has plenty to prove to investors, on the charts GPRO stock increasingly looks to be ready for a more meaningful break higher, if and when a well-defined line of technical resistance can be overcome.
For its second quarter, GoPro lost $0.66 per share on revenue of $220.8 million. While these numbers were better than what analysts had expected, on a year over year basis, revenue dropped sharply from $420 million.
The bulls note that GoPro has not released a new camera in some time but is due to bring a new product to the market in coming months, which could revive sales. The bears point to increasing competition in the camera space and how that may be cramping GoPro’s style for good.
Time will tell what the future holds for GoPro and whether it could still be a takeover target.
GPRO Stock Charts
On the multiyear weekly chart, we see that GPRO stock remains in a nasty downtrend through the lens of its all-time price action. Once the stock dropped below the high $30s in September 2015, the downward pressure became even more persistent.
Although GPRO stock has been in ‘consolidation mode’ now since early 2016, the stock did make a marginal new all-time low in mid-May. Through the lens of this longer-term chart there’s not much useful information to gain other than the fact that investors have largely given up on the stock.
If we now however zoom in on the daily chart, we see that this consolidation phase that GPRO stock has been stuck in for the majority of 2016 thus far is increasingly taking a more bullish tone.
Note that while this multimonth consolidation zone remains well intact, the several failed rallies since January have now marked a well-defined line of technical resistance as I highlighted with the blue bubbles. Yesterday’s 12.5% rally in GPRO stock came on a big surge in volume and a breakaway gap and thus looks to be the best attempt yet for the stock to break out of this range.
Active investors and traders now have two ways to play for a potential breakout; 1) begin nibbling on the long side after Thursday’s post-earnings rally or 2) wait for GPRO stock to give us a weekly close above the $14 area to confirm a breakout.
If the breakout is for real then GPRO could start steering toward the $16 area. Any sharp bearish reversal from here should be taken as a warning sign just like any of the failed rallies year-to-date have been.
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