GoPro Inc (NASDAQ:GPRO) rallied more than 15% last week, and today, it enters one of the most important days in the company’s existence. GPRO is expected to unveil its much-anticipated Karma drone today, as well as an update on its Hero camera series. At the same time, while still off 17% for the year-to-date, GoPro stock has wiggled itself into a better technical spot. So the current juncture looks like a make-or-break setup that depends on how today’s announcement is received.
According to the GoPro website, two events are scheduled for today. At noon ET, the company will unveil its products. At 1:30 p.m., GoPro will hold a Q&A session for investors and analysts. While investors likely will hone in on what the company has to say in terms of sales growth and expectations, the product announcement may steal the headline news.
As far as GoPro stock is concerned, it is entirely possible that last week’s rally was a “buy the rumor” move that could be followed by a “sell the news” reaction. However, if GPRO fails to falter after last week’s rally, then this might have been merely the beginning of a better leg higher.
Sooner than later, we’ll find out what the path of least resistance may be.
GoPro Stock Charts
On GoPro’s weekly chart, we see that last week’s rally formed a technically bullish candle, referred to as a bullish engulfing candle.
Note that the rally came on a spike in volume, but GPRO also closed the week right at the down-sloping yellow 50-week simple moving average. In my eyes, bulls now need another weekly rally in GoPro stock to confirm a better leg higher. Last week’s bullish reversal alone was not enough.
When I last offered a trade idea on GoPro stock on July 29, I shared a next upside target near the $16 area, or about 20% higher. Twelve trading sessions later, this price target was reached.
Over on the daily chart, we see that after my $16 price target was reached in mid-August, GoPro stock began to consolidate lower. By Sept. 12, it had retraced back to a confluence support area around the $12.50-$13 area made up of previous horizontal resistance as well as both the 50- and 200-day SMAs (yellow and red lines, respectively).
Last week’s rally broke GPRO out of this consolidation phase to the upside.
If GoPro sees further upside follow-through this week, it could reach $20 over the next few months. Any significant bearish reversal from here — particularly on a weekly closing basis — would put GoPro stock back in wait-and-see mode.
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