The Alphabet Inc. Class A stock (NASDAQ: GOOGL) traded slightly higher last Thursday, after hitting support at 1727 on Wednesday. Overall, the stock looks to be forming a complex “Head and Shoulders” formation, and thus, we would like to see whether it will be completed or not. For now, we will stay sidelined.
A clear dip below 1695, as well as the neckline of the H&S formation, may signal a short-term bearish reversal and allow declines towards the 1657 zone, marked by the highs of November 2nd and 3rd. If that area is not able to halt the slide, then a break lower may see scope for extensions towards the low of October 30th, at around 1600.
Shifting attention to our short-term oscillators, we see that the RSI lies flat near its 50 line, while the MACD is also flat, near both its zero and trigger lines. Both indicators detect a lack of directional momentum, which supports our choice to stand pat and wait to see whether (or not) the H&S pattern will be completed.
On the upside, a rebound above 1787 may discard the formation and encourage the bulls to aim for another test near the stocks record high of 1843.13, hit on December 3rd. If they don’t stop there, they will enter uncharted waters, and with no prior highs or lows to mark the next resistance, we would consider as the next territory to play that role, the round number of 1900.
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