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Google Stock Falls Again, Nearing Important Price Support

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If the stock can hold above $765, it will remain constructive for a bounce, or perhaps more.

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After a stealth drop in mid-January, Google (NASDAQ:GOOG) stock soared over 20% into early March. And with that run higher came talk of GOOG's stock price hitting $1000 per share. Whether GOOG stock would or wouldn't hit $1000 per share was irrelevant. What was relevant was the fact that many were feeling like $1000 per share was inevitable. And this kind of behavior is often a warning sign.

Since then, Google stock has fallen about 7%. And on Friday, GOOG stock gapped below its 50-day moving average toward an important confluence of support -- one that active investors should be paying attention to.

Below is a near-term chart of GOOG stock. To give you an idea of how my technical eyes move, here's what stands out to me:
  • Price is below the 50-day moving average (caution).
  • Price is still above the short-term uptrend line from November to present (important near-term support).
  • Price is resting just above a confluence of support (around $765): uptrend line, 38.2% Fibonacci retracement, and the October closing highs – this area also aligns with a measured A-B-C move lower (very important near-term support).
It is the last point that is the most important from a near-term technical perspective. If the stock can hold above $765, it will remain constructive for a bounce, or perhaps more.

Keep an eye on the Relative Strength Index (RSI), as it is currently at 38.50. Note that a drop down near 30 often leads to a trading bounce. However, I prefer an RSI divergence before I enter longer-term swing trades. Trade safe, trade disciplined.

GOOG Stock Near-Term Chart


Editor's Note: Andrew Nyquist is an independent investor based in the Minneapolis area. This article originally appeared on his investing and economics site, See It Market.

Twitter: @andrewnyquist
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No positions in stocks mentioned.

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