Watch These GM Price Levels as Stock Plunges After Trump’s Auto Tariffs Announcement

General Motors (GM) shares are likely to remain in the spotlight after tumbling Thursday amid concerns about the potential impact of the Trump administration’s newly announced tariffs on auto imports.

The drop in GM’s stock, along with declines for other leading car manufacturers and parts suppliers, followed President Donald Trump’s announcement late Wednesday that 25% tariffs would be imposed on all foreign-made cars and auto parts. GM’s stock was particularly hard hit because of the number of vehicles it imports, with significant exposure to markets in Mexico and South Korea.

GM shares led S&P decliners on Thursday, falling more than 7% to $47.20. The stock is down more than 20% from its 52-week high set in late November.

Below, we take a closer look at GM’s chart and use technical analysis to identify important price levels that investors may be monitoring.

Bearish Engulfing Pattern Emerges

GM shares have remained under pressure since breaking down below the neckline of a head and shoulders formation in late January.

More recently, a bearish engulfing pattern emerged on the chart following a short-lived upswing that preceded today’s drop on above-average volume. It’s also worth pointing out that the 50-day moving average (MA) recently crossed below the 200-day MA to form a death cross, a chart indicator warning of lower prices.

Let’s identify two important support levels to monitor given the stock’s weak technical outlook and also locate key overhead areas worth watching during potential recovery efforts.

Important Support Levels to Monitor

Further share price weakness could initially see a move down to around $45. The shares may attract buying interest in this area near a horizontal line that connects a range of peaks and troughs on the chart extending back to mid-July last year.

A decisive close below this level sets the stage for a possible drop to $40. Investors may seek to accumulate shares in this region near last year’s prominent early-August swing low, which also aligns with a series of similar prices on the chart throughout the first quarter of 2024.

Key Overhead Areas Worth Watching

During recovery efforts in the stock, it’s worth keeping track of how the price responds to the psychological $50 area. The shares could face resistance at this level near the July, August, and September peaks that sit alongside troughs that formed on the chart in December and January.

Finally, buying above this area opens the door for a rally to around $55. Investors who have bought GM shares at lower levels could seek exit points in this location on a retest of the head and shoulders formation’s two shoulders.

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As of the date this article was written, the author does not own any of the above securities.