Has a Major Topping Pattern Formed In Google?

Google has had an amazing run over the past couple of years. It is up over 35% since the beginning of 2012 and up over 25% year-to-date. However, the move up has pretty much stopped since May. Over the past couple of months, Google has formed a technical pattern has formed that might be a cause for concern for $GOOG bulls.

The Chart

Google has formed what technical analysts/chartists call a “Head-and-Shoulders”. This is a topping pattern if confirmed. Right now, Google is trading in the middle of the its multi-month range. If it moves higher from here and breaks out, than the head-and-shoulders pattern is nullified and the past few months will just be marked as a time of consolidation (which is very much possible).

But if it breaks down below the $844-847 level (the “Neckline), the Head-&-Shoulders pattern is confirmed and the stock would be headed much lower. If $GOOG does indeed break that $844-847 level, I’d expect it to trade down to the next major area of ~$766, which used to be former resistance but acted as support in April. A measured move will put Google down to $800. So those are two possible levels to watch for support if Google breaks down.

So what is it for Google? A Head-and-Shoulders top or just a normal consolidation setting up for higher prices?

$GOOG Daily chart

GOOGHSOct1

 

Below is a weekly chart. In this chart the consolidation is more evident as you are able to see the major run-ups and pauses $GOOG has had over the years.

GOOG Weekly

 

 

Tags: $GOOG $QQQ $XLK $COMPQ

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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