Although this rally is increasingly looking exhaustive in some aspects, the momentum of the move and the technical juncture at which the stock has recently arrived at could keep the stock going higher for another while in the near-term.
When Alphabet reported its latest quarterly results last week on July 28 the company handsomely beat both the top and bottom line estimates.
Although some analyst expressed concerns regarding the company’s drop in cost per click — an important online advertising revenue metric for the company — most other metrics in the company’s quarter looked promising.
This in turn led investors and traders to bid GOOGL stock higher the following trading day, July 29.
GOOGL Stock Charts
Looking at the charts of GOOGL stock through a multiyear lens, we see that so as to gain some perspective and for risk management purposes, we can draw a couple of simple trend lines within which the stock has been pushing higher over the years.
Although the stock has seen some meaningful consolidation periods along the way, investors with a trend-following approach continue to have success playing GOOGL stock with a simple ‘buy the dip, sell the rip’ strategy using these parallel lines.
The most recent so-called bullish reversal in late June, to no one’s great surprise, took place near the lower end of this longer-standing trading range and has since pushed the stock back toward the upper end of this range. From this perspective, the odds of profitably buying GOOGL stock at the current juncture are lower than what the odds were in late June.
But as always, this is a matter of time-frames.
On the daily chart, we see that the latest bump higher in GOOGL stock’s rally came after Alphabet reported earnings last week. This rally marginally pushed the stock out of a roughly 10-month sideways trading range and to fresh all-time highs.
Over the past few days, the stock has consolidated in a tight range, and considering the post-earnings up-gap, the odds of a continuation push higher in the near-term are increasingly high.
Whether we label this recent multiday consolidation phase a wedge or flag pattern is somewhat irrelevant. What’s important here is that the post-earnings momentum pushed the stock to fresh all-time highs and that thus far a constructive-looking consolidation period is taking place.
Active investors and traders could look to buy GOOGL stock for a trade upon a push past the $803 mark, using a first upside target between $830 and $840.
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