A Technical Take on Google GOOG

Dec 10, 2008: 10:34 AM CST

I haven’t discussed the technical picture on Google (GOOG) in a while, so let’s take a moment to look at the weekly and daily price structures for Google and what might be in store for the near future.

Google (GOOG) Weekly:

The dominant structure I’m seeing is a (potentially) completed “ABC” large scale corrective phase which took price sharply from $750 to $250 in a year – a devastating chop for investors.  Remember that each Corrective Wave itself subdivides, and what we had here was a large-scale “Zig-Zag” pattern (where Wave A was 5 fractal waves; Wave B was 3 fractal waves; and Wave C was also 5 fractal waves).

With that structure behind us, what is the current technical picture?

Price has formed a large-scale positive momentum divergence into the $250 price lows on what appears to be a selling climax (similar to what we saw at the end of Corrective Wave A) and so barring anything majorly unexpected, we should expect to see a push at least to test the falling 20 week EMA around $370 per share.

Notice also that two bullish candlesticks have formed at the support zone of $250 (one a hammer-like pattern and the other a bullish reversal doji).  The current week is confirming this pattern and could lead to higher prices in the short term – but keep in mind these are officially counter-trend rallies, and it would take a move over $600 to change the trend structure back to ‘up’ officially.

Google (GOOG) Daily:

It would appear that this chart leaves much to be desired for the bulls, but there are signs of hidden strength.  First off, price has formed a ‘mini-reversal,’ having formed a higher low and then formed a higher swing high – that’s bullish alone.  Also, price has broken officially (and closed) above the falling (now flattening) 20 day EMA.  Before you get too bullish, I might suggest waiting for conservative traders to wait for a close above the 50 day EMA for further confirmation.

Just like the weekly chart above, we see a positive swing momentum divergence forming under price, and a key doji day (candle) when price nipped beneath the $250 support zone.  All this Google ‘bullishness’ is contingent on price remaining above this $250 level, so that would be a logical place to insert a stop (or write bullish put credit spreads) underneath that zone.

Continue to study Google through your own analysis for further potential trading opportunities.

Also, take advantage of the Market Club’s two-month trial membership if you’ve not joined already.  From them you receive education, analysis, scans, signals, and insights from their team.

Corey Rosenbloom
Afraid to Trade.com

3 Comments

3 Responses to “A Technical Take on Google GOOG”

  1. Anonymous Says:

    I would like to point out the rising wedge on SPX.. Not to advertise, but I really believe this is worth taking a look at!

    http://f8analysis.blogspot.com/2008/12/chart-of-century.html

  2. Corey Rosenbloom Says:

    What gives you the 429 S&P ultimate target?

  3. Anonymous Says:

    I will explain that on another chart that I’m working on.. There are reasons for 429 as my target, the answer is simple, thats where support is, however you may not see it right away. The post may be a bit lengthy, as soon as I’m done I will surely let you know.

    P.S. I really appreciate all the work you do for your readers and I admire your style (humble). Keep up the great work!

    -T