Stumble it!Tonight I want to examine in detail the chart for Google (GOOG).
Google Stock Chart #1
The first chart goes back to 2004 when Google first began trading. In this chart you will see that I have marked every primary trend. We have three basic long term trends; from 2004 to early 2006, from early 2006 to the end of 2007, and finally the bear trend that began in early 2008 up to the present.
This chart also shows the Fibonacci retracement levels from the 2004 lows to the highs in 2007. Whenever we apply a Fibonacci study to any chart we always have to look to see if it is a ‘good fit’. We do this by looking to see if over the course of history there has been any significant interaction with the Fibonacci levels. In this case we do see some rather strong interactions with the Fibonacci retracement levels, especially at some pivot points. So the confidence in this long term Fibonacci price level study is good.
Also on this chart I have drawn what appears to be an ascending wedge formation taking shape over the recent few weeks. In general an ascending wedge has a ‘bearish’ outcome prediction.
Google Stock Chart #2
The second chart shows what appears to be a downward channel formation since early 2008.
What do these two charts tell us about Googles price in the future?
I’ll go over this one step at a time.
1. Google has been forming an ascending wedge pattern over the past several weeks. The ascending wedge intersects with resistance at the $345 price range (Fibonacci level).
2. The RSI (bottom of chart) shows that it is at resistance currently.
3. On the second chart the price is near the top end of the channel.
Outcome: Now comes the tricky part. Tricky in that we must wait for some confirmation to know the near term price prediction of Google.
The channel suggests that Google will begin trading lower and the ascending wedge suggests a bearish outcome, but only if it breaks BELOW the lower wedge line, that would be a confirmation. The price target for a confirmation of the ascending wedge would be the Fibonacci level at $235.
Should Google break ABOVE the channel (chart 2) then that would put a ‘bear market rally’ spin on Google with a target of around $410. Which would be an ideal shorting opportunity then.
As it stands right now, Google is offering two shorting opportunities. It is a matter of time which one presents itself to us.
