- GME stock has been trading sideways of late.
- GameStop released their branded crypto wallet in the Google Play store.
- Breaking through top line resistance implies a small rally may coalesce.
GameStop (GME) stock is reacting very little to management's unveiling on Monday of its first branded cryptocurrency wallet. In fact, shares are down 1.2% in the premarket on Tuesday to $95. This does not mean, however, that GME is destined to follow the market lower over the next few weeks. In contrast to the general market, GameStop's 4-hour chart presents a rather bullish case for a move higher, possibly to $130.
Also read: AMC Entertainment starts the week lower for third straight decline
GameStop Stock News: One wallet to rule them all
GameStop's new crypto wallet, called the GameStop Wallet simply enough, allows gamers to use it directly in their browser extensions. The wallet is GameStop's first foray into being a technology company, according to superfan site GMEdd.com. The idea behind it is that as more and more online games involve crypto-based prizes or items, the Gamestop Wallet will be the most convenient way to store them. In this sense, it is not such an unrelated sphere to invest in.
The wallet is a self-custodial wallet based on the Ethereum blockchain, which means that GameStop is not liable for lost or stolen crypto assets. The wallet was released on Sunday night on Google Play store without any announcement from the company, although its release has been rumored for months.
The crypto wallet is still in its beta infancy and may be tweaked in the future but currently, it allows users to transfer assets and currencies on both Ethereum's Layer 1 and Loopring's Layer 2 platforms. The Loopring Layer 2 offers transaction fees as low as 0.1%
Another use for the wallet is the storage of NFTs, which are often connected to digital gaming these days. GMEdd.com says, "two of the biggest barriers of NFT mass adoption [are] the complicated wallet set up process and high gas fees; GameStop’s new wallet solves both of these problems with its user-friendly onboarding design and native L2 integration that eliminates gas fees."
GameStop Stock Forecast: Bet on GME retesting $130 in near future
I am no meme stock fan or AMC ape. I am more at home in the world of five-year dividend growth rates and Chowder numbers, but the current GME stock chart intrigues me. Here we have a descending top line that acted as resistance for the past two months being ignored entirely by GME stock starting on May 19. Since then GME shares have drifted sideways well outside of the past two months' descent. It appears that a new price action structure is forming.
In the same way that GME price action found support at or just below $80 in mid-March, shares consolidated once more at this same level between May 11 and May 12. Once again $80 acted as a jump-off point. $80 now seems like a double bottom, which typically leads to stronger reversals. The current environment where even robust mega-cap tech stocks are selling off may be the wrong time for a sustained rally, but the chart sure seems like it is telling us something. Additionally, support at $88 comes stems from January.
The Relative Strength Index (RSI likewise shows a sustained move beginning on May 12. If GME price can close above $100 and the RSI can close above 50 (resistance), then there is a good chance GME can take off for another test of $130. The $130 level has acted as both support and resistance all year so far and as such seems a clear pivot.
GME 4-hour chart
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