Google Stock Is Setting Up Its Next Bullish Advance

google stock
Credit:iStock.com/volkan.basar

GOOGL Stock: This Heavyweight Is a Proxy for the Entire Equity Bull Market

This publication is focusing on Alphabet Inc (NASDAQ: GOOGL) stock because there are a number of indications on the Google stock chart suggesting that the next directional move in GOOGL stock is now in development.

If you follow my publications, then you are well aware that my views on a particular investment are created by analyzing the company’s stock chart. This method of investment analysis is called technical analysis, and I have been using it for nearly two decades. If you are wondering why I chose this method over others like fundamental analysis, the answer is quite simple. When technical analysis is applied correctly to an appropriate investment strategy, the results are simply incredible.

As a technical analyst, I am particularly enamored with GOOGL stock, and I have been following it for a great deal of time. I long ago decided that due to Alphabet stock’s spectacular performance, it has become one of my benchmark proxy plays. A benchmark proxy play serves to imply that as long as its stellar performance continues, I will have the inclination to believe that the environment towards equities remains favorable, and therefore, a global bull market is still in development.

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The spectacular performance that caused me to be enamored with Alphabet stock is illustrated on the following stock chart.

 Alphabet stock chart

Chart courtesy of StockCharts.com

This Google stock chart illustrates a bullish trend that has been in development since this investment first started trading. This bullish trend contains a series of higher highs and higher lows, which encapsulates the landscape, creating a progressive move toward higher stock prices. This price action is the quintessential characteristic that defines a bull market.

Capturing this quintessential bullish trend is accomplished using an uptrend line, which was created by simply connecting the series of higher lows that defined this tend. This uptrend line is why I am so enamored with this investment. It has supported the bullish move towards higher stock prices, and the sheer number of times it has been tested is a testament to its significance.

As long as GOOGL stock is trading above the uptrend line, I can only assume that higher stock prices will prevail because it indicates that a bull market in Alphabet stock is in development. Given Google’s weight, I am also using this uptrend line to define the health of the entire market in equities. Therefore, as long as the stock is trading north of this uptrend line, I have the inclination to believe that a bull market in equities is in development.

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I mentioned earlier that there are certain developments on the Alphabet stock chart suggesting that the next move in this investment is being set up. These developments are illustrated on the following stock chart.

Google stock chart

Chart courtesy of StockCharts.com

This Google stock chart illustrates that a consolidation pattern is currently in development above the uptrend line, which just so happens to coincide with the 200-day moving average.

The 200-day moving average is a popular metric used by the investment community to distinguish between healthy bullish investments and unhealthy bearish investments. Deciphering between these two polar opposites is quite simple. If a stock is trading above the 200-day moving average, the investment is considered healthy and bullish. If it is trading below the 200-day moving average, this dictates that the investment is unhealthy and bearish. Google stock is trading above the 200-day moving average, which reinforces the bullish pretense suggested by its stature above the uptrend line.

The consolidation pattern is what I am currently focused on. This pattern began its development after the share price gapped higher in April, and it has been characterized by a trading range that currently resides in between $920.00 and $1,000. A resolution of this consolidation pattern would indicate which direction Alphabet stock is heading in next. A resolution would require GOOGL stock to either break above resistance at $1,000, or break below support at $920.00.

The consolidation pattern is developing above both the uptrend line and the 200-day moving average. I stated earlier that as long as Google stock is trading above the uptrend line, I will have the inclination to believe that a bull market is still in development. Therefore, I have the inclination to believe that this pattern will resolve itself in a bullish manner and higher GOOGL stock prices will follow.

Analyst Take: 

Alphabet stock is setting up a consolidation pattern above a very influential uptrend line, which just so happens to coincide with the 200-day moving average. These developments support the notion that a move towards higher Google stock prices is in development.

My bullish view on GOOGL stock was created by analyzing the company’s stock chart and it will remain bullish until there are indications on the stock chart that support another view.