Analyzing the Value of GameStop Shares Using Elliott’s Wave Theory

GameStop is a video game chain stores and merchandising that has made headlines for a few days due to a dramatic rise experienced by its shares on the stock exchange.

The company lost business over the years. Players prefer to buy the games on internet or play online, and consequently the value of the shares dropped. But the price of stocks also fell for another reason: some high investment funds bet that the value of GameStop’s shares would fall.

Following the rise of GameStop shares are private investors grouped into Reddit’s WallStreetBets forum, where users share memes, gifs and also, in some cases, investment tips. They realized that large investors were conducting short trades against GameStop and decided to take advantage of it to buy shares in the company. By investing in these stocks, the price started to rise very quickly.

In the end, GameStop’s share price soared: at the beginning of the year, its shares cost $17, while on Thursday, January 28, 2021, they reached $500. Investment funds that opted down by GameStop have accumulated large losses and, in some cases, have been forced to sell shares of other companies to cover them.

Forecasting GameStop using Elliott Wave t Elliott’s Wave Theory

GameStop 15 min Chart

The rally above $500 completed a Grand Super Cycle as wave ((a)) in a 5-wave structure. Wave (I) was the peak of 2007, wave (II) was the low of 2019, waves (III) and (IV) were on January 27, and wave (V), on 28, completing the cycle. Then we have a clear 3-3-5 corrective flat structure, waves (a), (b) and (c), where (c) must end as an impulse. (If you want to learn more about Elliott Wave Theory, please follow this link: Elliott Wave Theory). We are currently building the last wave V of (c), which could continue to slowly decline towards the value of 10.72 where it should bounce or the GameStop company files for bankruptcy. Another alternative for wave V is to take the structure of an ending diagonal, for this option the price of the stock must remain below $ 121.94.