GOOG shares could be in for a bounce, as price is testing a key support zone on its daily time frame. In its previous test, shares have bounced off the 50 simple moving average, which has also held as support back in June this year.
MACD is on middle ground and hardly offering any clear directional clues at the moment, as GOOG shares traders also try to figure out what’s next for the stock price. RSI is hinting at a potential bounce, as the oscillator is climbing and indicating that buying momentum could return.
GOOG Shares Forecast
A bounce for GOOG shares could last until the previous highs close to the $600/share level, which might act as near-term resistance until the end of the year. On the other hand, a breakdown from support might mean the start of a downtrend for GOOG shares.
Take note that a complex head and shoulders pattern appears to be forming on the daily time frame, with the right shoulder just formed and price testing the neckline. A candle close below the $550-560/share area could confirm that a breakdown took place and that further losses are to be expected for GOOG shares.
In that case, the drop might last until the next support zone at the $520/share level, which has held earlier in the year. The head and shoulders chart formation is roughly $40 in height, which suggests that the resulting breakdown could be of the same size.
Much could depend on risk sentiment for US equities in the coming days, as current geopolitical tension is preventing equity traders from capitalizing on higher-yielding assets such as GOOG shares. Most have booked profits ahead of this week’s top-tier economic events and the US Labor Day holiday.
Gains in stock price might also hinge on Fed monetary policy, as Yellen recently admitted that the US central bank might remove stimulus if strong signs of a recovery are seen.
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