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Could Alphabet Inc surge 11% higher from key support?

January 08, 2021 12:00

Technology stocks have taken a beating in recent weeks as investors favoured value stocks instead of growth stocks. However, the sector rotation that has taken place is now seeing signs of a turn with new lockdown restrictions and vaccine rollout concerns forcing investors to move back into tech. 

Alphabet Inc, the owner of Google, is showing some interesting technical levels on its share price. Over the past few weeks, the company’s stock price has struggled to break through two key levels of support, shown on the daily chart below: 

Source: Admiral Markets MetaTrader 5, #GOOG, Daily - Data range: from Apr 9, 2020, to Jan 8, 2021, performed on Jan 8, 2021, at 8:30 am GMT. Please note: Past performance is not a reliable indicator of future results. Last five-year performance: 2020 = +7.89%, 2019 = -5.27%, 2018 = -2.11%, 2017 = +1.48%, 2016 = -3.97%, 2015 = +6.28%. 

 

The first support level is shown by the black horizontal line. This was created by the swing high at 1,717.99 during August 2020 which caused a temporary sell-off. When the price came back up and broke through it, the price level became a support level with more than four bounces to the upside since. 

The second support level is the 50-period exponential moving average (red line). Moving averages are widely used in trending markets and currently confirm the trend is up with the 50-period, 100-period (green line) and 200-period (blue line) all pushing higher. 

This week price bounced off both of these support levels for a potential move upwards. Traders will now be looking for additional signs of whether the market will continue its push higher, such as drilling to lower timeframes and viewing cycle formations. 

If price can continue, traders may look to the 1,1888.00 price level, which is the 1.272 Fibonacci Extension from the 3 December 2020 swing high to the 21 December swing low, representing a near 11% push higher from December lows.  

According to BarChart, there has been a huge shift in bullish analyst ratings for Alphabet stock, as shown below:

Source: BarChart, January 8, 2021

 

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