I haven’t discussed the technical picture on Google () 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 () 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 () 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.
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