alphabet googl further potential upside above 783 50770 0 key medium term support 1835752016

In the recent past week, Alphabet (Google) has announced a slew of new business initiatives such as a partnering agreement with CBS to stream video […]

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By :  ,  Financial Analyst

In the recent past week, Alphabet (Google) has announced a slew of new business initiatives such as a partnering agreement with CBS to stream video content on its web-based TV service via Google’s YouTube platform. In addition, Alphabet is also in talks with Disney, 21st Century Fox and NBC to distribute media contents on Google’s web TV service.

On the electronic payment front, Google has just announced two major strategic partnerships with Visa and MasterCard that aimed at expanding the scope of mobile payments via Android Pay. Thus, Android Pay users who are shopping online from smartphones will be able to make seamless payments on thousands of new sites where either Visa Checkout or Masterpass are accepted. These new payment partnerships came just in time with the newly launch Google’s smartphone Pixel.

All these new initiatives are likely to boast future revenue flows as Alphabet (Google) diversified and broaden its base away from the search engine business model.

This coming Thursday 27 October, Alphabet will announce its Q3 2016 earnings where consensus is set at 8.62 EPS versus 7.35 EPS a year ago (17.3% growth).   

Let’s us now take a deep dive into Alphabet (Google) from a technical analysis perspective.

Alphabet (GOOGL)


google-daily_24-oct-2016(Click to enlarge charts)

Key elements

  • The longer-term secular bullish trend in place since the November 2008 low of 140.14 remains intact as per highlighted by the 7-year old major ascending trendline acting as a support at 511.10/495.00 (see weekly chart).
  • After the end of a year plus of consolidation period from January 2010 to October  2011 low of 240.53 (in line with the peripherals European sovereign debt crisis), the uptrend of Alphabet/Google accelerated as indicted by the steeper green ascending trendline from the October 2011 low now acting as a support at 672.66 (see weekly chart).
  • In the medium-term (1 to 3 weeks), technical elements are positive for Alphabet/Google which advocates for further potential upside.
  • The daily RSI oscillator remains bullish above its supports and still has room for further upside towards its extreme overbought level. These observations suggest that upside momentum of price action remains intact and it is not yet “overstretched”.
  • Based on the Elliot Wave Principal and fractal analysis, Alphabet/Google is likely to be undergoing the potential intermediate term bullish upleg, wave 5/ in place since 27 June 2016 low (post Brexit) to complete the longer-term primary degree bullish wave (5) of III. The potential targets stands at the 913.57/932.36 zone. Thereafter, the stock faces the risk to see the start of a potential multi-month correction (20% to 30%) as the impending cycle degree corrective wave IV unfolds.
  • The key medium-term support now rests at 783.50/770.00 which is defined by the recent gap of 01 August 2016 and a Fibonacci cluster.
  • The key medium-term resistance rests at the 913.57/932.36 zone which is defined by a confluence of elements. The upper boundary of a medium-term bullish ascending channel in place since 09 January 2015 low, the exit potential of the recent bullish breakout from the descending range (February 2016 to 27 June 2016) and a Fibonacci projection cluster.

Key levels (1 to 3 weeks)

Intermediate support: 813.33

Pivot (key support): 783.50/770.00

Resistances: 913.57 & 932.36

Next support: 672.66


As long as the 783.50/770.00 medium-term pivotal support holds, the Index is likely to see a further upside movement to target 913.57 with a maximum limit set at 932.36.

On the other hand, failure to hold above 770.00 (the lower limit of the medium-term pivotal support) may put the bulls on hold for a deep decline to test key ascending trendline support at 672.66.

Charts are from eSignal


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