Alphabet (NASDAQ:) hit resistance fractionally below the psychological zone of 1500 on Friday. Overall, it continues to trade below the prior upside support line drawn from the low of Mar. 23rd, and thus, we would consider the near-term outlook to be cautiously negative for now.
In order to start examining the case for further declines, we would like to see a clear and decisive dip below 1400, a support marked by the lows of Sept. 21, 23 and 24. Such a move would confirm a forthcoming lower low and may initially target the lows of June 26 and 29, at around 1350. If that level doesn’t hold either, then we may experience extensions towards the 1290 hurdle, which provided strong resistance between April 17 and 27. Another break, below 1290, could pave the way towards the 1225 level, marked by the low of April 14.
Shifting attention to our daily oscillators, we see that the RSI turned down after hitting resistance fractionally below 50, while the MACD, although negative, lies slightly above its trigger line. Both indicators detect downside speed, but the fact that the MACD is above its trigger line supports our view to wait for a dip below 1400 before getting confident on further declines.
On the upside, we would like to see a recovery back above 1500 before we abandon the bearish case. Such a move would take the price back above the 50-day EMA and may allow advances towards the 1575 barrier, defined as a resistance by the peak of Sept. 10. If investors are willing to overlook that level, we may see them pushing the stock towards the 1655 zone, marked by the high of Aug. 26.
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