A Critical Support in GS

Goldman Sachs (GS) had a very positive move higher from lows below $70 to highs above $190 in 2009. Since then, GS has started to fall and recently it fell all the way to $130 range. This
range at $130 is critical in the it represents a major support level. Investors must watch this support very carefully because a break under $130 will send GS all the way down towards $70 level. If this were to occur, then GS will surely take the stock market down with it. However, a more likely case would be for GS to hold this $130 level and start sending price higher towards $150-$160 level.

In looking at a daily chart of GS since January 2010, we see that GS actually made it to $130-$135 level three times already. To me, GS is setting itself for a bullish run above $145 level and eventually above $150 level. The Long traders for GS must hold this $130 level in order for this to happen. If the Longs fail here at this critical junction, GS will tank and go much much lower!

One more note on GS. I do want to point out a descending patter in GS. The chart below represents past 3 months of GS. As you can see, there is a clear descending pattern. Usually, a stock tends to break out of descending patter by moving higher. Let’s wait and see if that will be the case for GS.

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