After declining almost $100 from its high early this year, we saw Google gaining back some of that loss in February. Does this mean GOOG has made it out of the hole and should rally from here? In looking at the technical analysis, it would seem as
though GOOG will have some difficulty rallying from here. In fact, it looks like GOOG has the potential to decline below $500 if it manages to break the support at $520.
though GOOG will have some difficulty rallying from here. In fact, it looks like GOOG has the potential to decline below $500 if it manages to break the support at $520.
In looking at a four months chart, GOOG has made a small rally from its low around $525. During this time, it has formed an ascending triangle. The reason why I believe GOOG is headed down is the fact that the ascending triangle patter was broken (see the small red circle). Usually, this signals a downward trend in a stock. Also, notice that there was a relatively low volume during this small rally compared to the large volume during the decline in January 2010. Currently, there is a major resistance level is at $545 where the buyers are trying hard to break and rally into $550 range. At the same time, there is also support at $520 where the sellers are trying to break to drive down the price further below $500. Who will win this battle?
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