General Motors Company (GM) shares fell more than 2% on Wednesday amid concerns that the United States will leave the North American Free Trade Agreement (NAFTA). According to Canadian officials speaking anonymously, there is a greater than 50% likelihood of President Donald Trump giving six months' notice to withdraw from NAFTA. The comments have worried Canadian and Mexican officials and caused ripples in the market.

The comments come shortly after Canada filed a petition with the World Trade Organization (WTO) over duties against Canada and other countries. With the sixth round of NAFTA negotiations starting on Jan. 23, officials are increasingly worried that the talks will fall apart despite domestic pressure on President Trump to avoid withdrawal. The positive news is that the three countries have already planned more talks in February in Mexico City. (See also: 3 Short Plays If NAFTA Crumbles.)

Technical chart showing the performance of General Motors Company (GM) stock

From a technical standpoint, the stock briefly surpassed R2 resistance at $43.90 before breaking down to the 50-day moving average, trendline support and R1 support at around $42.45. The relative strength index (RSI) moved to neutral levels at 52.82, but the moving average convergence divergence (MACD) remains in a bullish uptrend. The overall trend remains uncertain, however, given these dynamics.

Traders should watch for a breakdown from these key support levels to the pivot point at $41.57 or trendline support at around $40.50. If the stock rebounds from these levels, traders should watch for a move to R2 resistance at $43.90 or prior reaction highs of around $45.00. The moderate RSI and MACD readings make the future difficult to predict, but the NAFTA developments are likely to have an ongoing impact. (For more, see: General Motors Stock to Outperform in 2018: RBC.)

Chart courtesy of The author holds no position in the stock(s) mentioned except through passively managed index funds.

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