Breaking: AMC Entertainment Holdings Stock Price tests support at the key $12.22 level

• AMC shares fall nearly 4% from the open on Thursday.
• Shares of the embattled theatre chain are close to a break of the key $12.22 support level.
• AMC one of the few stocks down in a positive market.

Update May 20: AMC shares are under pressure straight from the open on Thursday as the stock has dropped nearly 4%, trying to break the key $12.22 support. This is key to the bullish trend we have seen recently in AMC. Breaking $12.2 also breaks the 9-day moving average and moves AMC into a more neutral zone. The sharp move up had seen momentum oscillators Relative Strength and Commodity Channel Index show overbought levels on Tuesday. AMC shares are just hovering below the key support at $12.19 at the time of writing, down 3.4%.

AMC shares finally ended their impressive run as the Bitcoin sell-off hit meme stocks hard. AMC did hold the key support at $12.22, but it was a tough day for the shares, suffering a near 10% loss.

Just in case you are not too familiar with the whole GameStop and related meme stock saga, here is a little recap of the story so far from AMC's point of view. AMC is a global cinema chain and, as a result, has struggled during the global pandemic as most of these cinemas have been closed for the better part of a year. The company narrowly avoided bankruptcy through the interest of retail traders. By strongly backing it, these retail traders allowed AMC to raise capital and debt, meaning it could survive the pandemic. 

AMC stock news

The catalyst for the rally was the earnings news on May 6. AMC missed analyst expectations, but the conference call was positive. The CEO Adam Aron thanked the new retail investors and made a donation to R/WallStreetBets' favoured charity, the Diane Fossey Gorilla Fund. Adam Aron also pointed out that nearly three million cinema goers attended AMC theatres in the first quarter. This emboldened investors to go back in and buy more AMC shares and so began eight straight sessions of gains. The most notable was the explosion out of the triangle formation on May 13 when AMC shares jumped over 20%.

News flow and sentiment had been boosted by AMC announcing it had completed the offering of 43 million shares it launched on April 29. AMC CEO and President Adam Aron said, "the additional cash raised puts AMC in a stronger position to tackle the challenges and capitalize on the opportunities that lie ahead." 

AMC's share price exploded out of the triangle formation FXStreet had identified. The first breakout target of $12.22 was duly captured and is now the key level to hold to keep the bullish trend. Consolidation for a time is fine for bulls so long as this $12.22 level is not breached. The RSI (Relative Strength Index) and CCI (Commodity Channel Index) had shown overbought signals on Wednesday, perhaps adding to the bearishness as well as some gains being crystallized. A phase of consolidation should see both momentum oscillators, RSI and CCI, retreat to more neutral levels and shares just hold $12.22. 

The target of a triangle breakout is the size of the entry, in this case a $7.88 range entry. The breakout target is set, therefore, at $19.08. This is also close to the highs seen back in January during the peak GameStop (GME) saga when AMC shares topped out at $20.36.