Title: Analyzing Alphabet Inc. (GOOGL): A Closer Look at Potential Investment Opportunities
Are you considering investing in Alphabet Inc. (GOOGL) but feeling cautious due to recent news of a potential break-up? Don’t let that deter you just yet. This week’s pullback in GOOGL could actually be setting up a bullish pattern known as an inverted-head-and-shoulders bottom. Let’s delve into this pattern and explore key price levels that investors should keep an eye on in the days ahead.
An inverted head-and-shoulders pattern is formed when a major low is surrounded by two higher lows. In the case of GOOGL, we are looking at the September low around $148 and the higher swing low in early August around $155. The recent sell-off could potentially form the right shoulder, completing the set-up of this bullish price pattern.
For a perfect inverted-head-and-shoulders pattern, symmetry is key. The left and right sides should be comparable in time and price range. A right shoulder in the $155-$160 range would align well with the price action over the last quarter. GOOGL is currently testing its 200-day moving average, which sits around $159.50, offering a potential level of support. Additionally, the 61.8% retracement level using the March to September rally as a framework could provide further price support.
The “neckline” is a crucial level for this price pattern, formed by the swing highs between the head and the shoulders. In this case, the neckline aligns almost perfectly with the 38.2% Fibonacci retracement level. If GOOGL manages to break above the neckline at $168, we could see a retest of the July peak around $191.
It’s worth noting that Alphabet is not the only Magnificent 7 stock testing its 200-day moving average this week. Amazon.com, Inc. (AMZN) and Microsoft Corp. (MSFT) are also in a similar position. If these leading stocks hold their key moving average support, October could be just a brief interruption of a larger bullish phase. However, failure to hold these levels could have a bearish impact on the major equity averages.
In conclusion, while news of a potential break-up may have initially caused concern, a closer look at the technical analysis of GOOGL reveals potential investment opportunities. By monitoring key price levels and staying informed about broader market trends, investors can position themselves strategically for potential gains.
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