Daily and Weekly Charting the Google Thousand Dollar Breakout

Oct 18, 2013: 12:07 PM CST

In our last update of Google (GOOG), we noted the “Sideways Range and Key Levels for Trading Google,” and we now note the upside breakout of the trading range not just to new all-time highs, but beyond the $1,000 per share reference level which is sure to generate headlines.

Let’s update the Google chart with the new breakout of the trading range:

Google GOOG Breakout above $1,000 Impulse

Again, from the previous discussion about the Sideways Trading Range or Rectangle Price Pattern, we see the eventual breakout occurring today from this “Value” or consolidation area (between $845 and $920).

An initial breakout tends to be fueled both by new buyers entering new positions along with old sellers buying-back shares to cover short-sold (and financially losing) positions.

The combined actions create “feedback loops” where higher prices lead to higher prices, as is the case this morning with the opening gap into $980 and subsequent movement up above the $1,000 round number (and rarely achieved) price level.

It’s a phenomenal achievement for the stock and the feedback loop of impulsive price action may still continue.

The larger structure – as seen on the weekly chart – shows how shares got to this point:

Google GOOG Weekly Chart Breakout Protrend bull market

Let’s start our discussion with the mid-2012 breakout above the $650 per share level and larger consolidation or ascending triangle style price pattern.

The initial breakout above $650 was the opening gambit of a week-over-week impulse toward the $800 per share level.

After a lengthy retracement back to the $650 level at the end of 2012 to ‘retest’ the breakout trendline, shares found support and the prevailing uptrend continued.

We can see the additional pro-trend upside action and counter-trend retracement action all the way to the present $1,000 level.

Note how price consistently found support (buyers stepped in) at the rising 20 week EMA, which is a reminder of why we use moving averages as key target and reference/inflection levels (they can become self-fulfilling prophecies – they’re not magic).

There was a possibility Google (GOOG) shares would break the critical multi-timeframe support confluence into $850 but this was not the case.

The pro-trend or bullish thesis resumed and we see the long-term price action that set the stage for the breakout impulse.

It also serves as a lesson in general trend following tactics as opposed to reversal strategies played on a strong stock that is getting stronger (I recently charted the “strong getting stronger” situation in GameStop – GME).

For now, continue following price relative to the $1,000 reference area and potential for additional upside action that may be generated by an ongoing positive feedback loop in motion.

I’ll be discussing breakout, retracement, and reversal trading tactics live at the Las Vegas Traders Expo on November 22 – join me and your fellow traders at the free expo!

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

4 Comments

4 Responses to “Daily and Weekly Charting the Google Thousand Dollar Breakout”

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