Google traded higher on Friday, after hitting support at 2670 on Thursday. However, it stayed below the downside resistance line drawn from the high of September 1st, as well as below the prior uptrend line taken from the low of May 12th. In our view, this paints a negative short-term picture, and thus, we will class the latest recovery as a corrective bounce.
The recovery may continue for a while more, but investors may jump out the action again as soon as the stock hits the 2765 barrier, marked as a resistance by the highs of July 28th and August 16th. We could see another leg south, which may take the price below the 2670 zone, thereby confirming a forthcoming lower low. Such a dip will confirm a forthcoming lower low on the 4-hour chart and may pave the way towards the 2587 level, marked by the inside swing high of July 14th. Another break, below 2587, could extend the fall towards the low of July 19th, at 2470.
Our short-term oscillators detect slowing downside speed, which supports the case for some further recovery before another leg south. The RSI remains below 50, but it recently rebounded from near its 30 line, while the MACD, although negative, rebounded as well and crossed above its trigger line.
The move that could turn the outlook positive again, may be a break above 2850. This will take the stock above both the aforementioned diagonal lines and will also confirm a forthcoming higher high. Investors may first target the 2895 zone, which provided resistance between September 7th and 15th, and then, the all-time high, at around 2925. If they don’t stop there, we will mark as our next possible resistance territories the round figures of 3000 and 3100, as we don’t have prior highs and inside swing lows to mark such territories.
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