Reversal Signals on GOOG Shares – Nov 5, 2014

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Reversal Signals on GOOG Shares - Nov 5, 2014

Reversal Signals on GOOG Shares - Nov 5, 2014

GOOG shares have been on a sharp decline for most of October, only to recover in the first week of this month. However, this seems to be a mere retracement as reversal candlesticks have already formed and the rally is showing exhaustion.

A decline from the current levels could lead to a drop until the $500/share level, which has acted as support in the past. Further losses could lead to a longer-term downtrend and possibly a test of $450/share.

GOOG Shares Forecast

On the other hand, a rally from the current price levels could push GOOG shares to the previous highs at the $590-600/share levels. After all, MACD is reflecting a pickup in buying momentum, indicating that further gains could still be possible. RSI is also moving higher for the time being, although it is starting to turn lower from the middle of the range.

Some industry experts have lowered their price forecasts for GOOG shares this year, from $750/share down to $650/share. They cited lower growth in advertising revenue and EPS.

The recent improvement in the US economic sentiment has lifted GOOG shares in the past days, as the Fed has reverted back to its hawkish stance and appears to be on track to hike interest rates next year. However, much could hinge on the upcoming NFP report this Friday, which could make or break this sentiment.

A bleak jobs increase would undermine the Fed’s upbeat bias and remind traders that the decision to tighten is still mostly dependent on data. On the other hand, strong jobs data could renew risk appetite and demand for US equities, which could help boost GOOG shares towards the end of the week.

Geopolitical risk and the threat of falling oil prices also impact market sentiment and equity behavior, although these don’t directly affect GOOG shares price action.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com