Goldman Sachs Stock Chart Technical Analysis
Companies / Company Chart Analysis Feb 08, 2015 - 03:15 PM GMTBy: Austin_Galt
GOLDMAN SACHS GROUP (GS)
Goldman Sachs Group (GS) is a global investment banking group and is listed on the New York Stock Exchange (NYSE) with a market capitalisation of around $75billion. Price last traded at $183.43. To learn more about the company, please visit its website at www.goldmansachs.com
Let’s begin with the small picture and work our way up from there.
GS DAILY CHART
Price recently bounced off its low which set up a bullish divergence on both the Relative Strength Indicator (RSI) and Moving Average Convergence Divergence (MACD) indicator.
The Parabolic Stop and Reverse (PSAR) indicator has a bullish bias after price busted the dots on the upside a few days ago.
The Bollinger Bands show price has bounced back up to the upper band and I think it can push further higher over the coming days as it clings to the upper band.
The recent low set up a double bottom with the October 2014 low. This double bottom is with the trend which is bullish and hence should lead to new highs. But I have my doubts. Why?
Firstly, there is no 100% proof system in the market. Just ask the old bosses of Long Term Capital Management! The recent low just doesn’t look solid enough to my eye. But that’s the art as opposed to the science. I would like to have seen price really test the support of the October 2014 low by breaking below that level to see how price reacts and hopefully get a false break low. But we didn’t get that test so I believe a bear market rally only is now in progress.
As for how high this bear rally will trade, I have added Fibonacci retracement levels of the move down from recent high to recent low. I favour price retracing to either the 61.8% level at $188.20 or the 76.4% level at $191.97. I favour the latter.
GS WEEKLY CHART
The RSI has turned back up but this is coming after a new low so the move higher is on weak foundations.
The MACD is still trending down despite the recent rally. The averages look like they are about to turn back up but that may run out of time if price turns back down shortly. Let’s see.
The PSAR indicator has a bearish bias with the dots above price.
Price has left the lower Bollinger Band and if this is a bear market rally, which I think it is, price could be expected to turn back down around the middle band which is currently just under $188. That is right around the 61.8% level but price often pushes a bit above bringing the 76.4% right into the mix.
If price does indeed turn back down, breaking below the October 2014 low of $171.26 would look bearish while breaking below the April 2014 low at $151.65 would likely confirm the bear market is on.
GS MONTHLY CHART
The recent high at $198.06 was at resistance given from the October 2009 high denoted by the horizontal line. The recent high was actually a little false break top which also instils confidence in me that the trend is now down.
The RSI is looking weak as it seems on its way to oversold territory while the Stochastic and MACD indicators have both made recent bearish crossovers and now look headed down.
As for how low I expect price to trade in this new bear trend, if it is a bear trend of course, I have added Fibonacci retracement levels of the move up from October 2011 low to recent high. I have used the October 2011 low as a starting point as I don’t believe price will trade below there. However, I do expect a deep retracement back to the 76.4% level at $111.12. Personally, I think price will nudge lower but not as low as the 88.6% level at $97.24. If I had to pinpoint a price I will settle with $101. I doubt will we see double digits. Time will tell.
Let’s wrap it up with the big picture yearly chart.
GS YEARLY CHART
The RSI is in no man’s land but there does look to be a pattern of higher lows and higher highs setting up which is bullish. The next major price low being accompanied by yet another higher low RSI reading would look good for the bulls. Let’s see.
The PSAR indicator still has a bearish bias.
I have added an Andrew’s Pitchfork and I’d like to see price come back to test the lower channel line. I often note highs and lows are false breaks of the upper and lower trend lines and I’d like to see the final pullback low be a false break below the lower trend line.
I have added Fibonacci retracement levels of the move down from all time high to major low. Looking retroactively, price has already found support at the 76.4% level so I’d like price to next find support at the 61.8% level at $104.90. Now the 61.8% level is one of the most widely followed by technicians and I find price often dips a bit below as it tries to trick these traders. Dipping a bit below to $101 would suit perfectly!
Disclosure – I have no financial interest in GS.
By Austin Galt
Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.
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