Google Stock Quote

Here’s why I own MTPredictor software.

I mentioned a possible buying opportunity for Google using Fibonacci retracements and projections last week.

Soon after that, MTPredictor showed a buying opportunity, the signal shown here:

Now keep in mind that the software did this automatically. The software showed a setup, it did not signal a trading opportunity.

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Side note: The software DOES automatically signal trading opportunities, this just didn’t meet the criteria. Here’s an example from the US Treasury bond that was automatic.
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While I encourage everyone to think for themselves, there is no reason you can’t get some help from a software program. Isn’t that why we have computers?

Keep in mind that this opportunity showed up on the ten minute charts, so this is for day traders. But make no mistake, these opportunities show up on all time frames.

Traders would have been buyers on the afternoon of December 22nd as the stock traded above the signal bar’s high of $184.66.

Depending on how close you place your stop loss order (you do use stop loss orders, don’t you?), you may have been stopped out just below the entry bar’s low of $184.35 within 2 hours. The stock traded down to $184.30.

If not stopped out, you very well could be in a position like this:

The Trade

Today’s low stops right at the confluence of the 38% Fibonacci retracement from the larger time frame AND at the 100% price projection of the previous down swing.

38% fibonacci retracement

Let’s break that previous comment down.

First, today’s low is near the 38% retracement level of the upswing that started on 16 December near $176 and ended on 20 December near $188.46. The retracement level targets $183.68.

Second, the 100% price projection of the previous down swing … look at the linked 10 minute chart, the down swing that ends at A is matched in price with the downswing from B to C. This targets the $183.50.

Today’s low is $183.40.

All the conditions are in place for a buying opportunity IF the stock trades up from these price levels.

Google stock is taking out previous highs. See the chart:

resistance

Today’s first hour broke through the previous swing high convincingly. The hourly price bar was a large range bar relative to the recent price bars. After the first hour, the stock spent the rest of the day consolidating those gains.

Next target is the $189.80 swing high of November 12, 2004.

Google stock has made a trendline break to the upside.

See for yourself:

trendline break

What is encouraging for the bulls is that the trendline break day (yesterday) and today have higher than normal volume associated with them. This tips the odds in favor of a valid trendline break.

This formation is a pennant. Prices coiling up like they have often give way to great price volatility.

For those with a long position in the stock, this can be viewed as a positive development.

GOOG has found what can be best described as “tentative support".

The 60 minute chart shows the stock forming a double bottom near the 62% Fibonacci retracement level of the advance from $161.31 to $182.95.

tentative support

The fact that the stock is starting to make higher highs on this time frame is an indication that the stock might move higher. The first hour of trading took out the Wednesday morning high.

Traders looking to take a long swing position will wait until the stock trades above Friday’s $174.88 high.

If filled, a protective sell stop goes no more than a few cents less than last week’s low of $168.47.

Looks like the bears have their claws around GOOG.

This decline has the all the signs of a particularly nasty decline. It started with the daily price bars decreasing as the most recent top was made just five days ago. A couple of days ago we had a potentially bullish trading opportunity with Google making a reversal bar to the upside. But, the stock never followed through. Yesterday’s price bar was a down bar with a price range larger than the previous five price bars and today’s price was was an even larger range down bar.

It’s one of those declines that just kind of sneaks up on you.

The linked chart showing the last three declines.

down bar

If history is any indication, this down move is good for at least another $5.

The last few messages have talked about the possibility of lower prices and Google following this nice pattern of reversing.

Well guess what, it looks like the obvious pattern might not work anymore. Read the last few messages to understand what I am saying.

Friday’s price bar was a classic reversal to the upside.

The stock traded below Thursday’s low, closed greater than the open, and closed greater than the previous day’s close. Doesn’t get much better than that.

The only thing now is to confirm the reversal with a trade above Friday’s high. My preference is to NOT take a long position if a stock gaps above the reversal day’s high. I would rather miss a perfectly good trade then fall for the old “gap and trap” routine that happens frequently.

The other price action that bodes for higher prices now is the three consecutive days of lower highs. This sets up a “pressure” situation where prices move higher once the pattern of lower highs is broken.

All of this speculation is fine - now it’s time for the stock to do it’s thing.

reversal bar

If history is any indication, the stock is due for lower prices - at least $10 lower.

lower prices

Look at the chart. I have marked off the recent price swings mentioned yesterday. The stock seems to trade up for down consistently for at least a week. By consistent, I mean the stock doesn’t trade below the previous day’s low on the uptrend or trade above the previous day’s high on the downtrend.

But when it does …

The stock trends in the other direction - typically for more than $10 at a time.

Usually, when a pattern like this becomes obvious, the pattern fails.

Did anyone take a short position in this stock as the stock traded below Tuesday’s low of $180.25?

That’s not a good sign for GOOG stock.

The overall market made an impressive move to the upside and Google did just the opposite. Today was a reversal day to the downside.

The stock closed down today relative to yesterday’s close, closed down relative to today’s open and closed below yesterday’s low.

The recent rally - with five consecutive higher lows - sets up a downside bias with the stock trading below yesterday’s low.

Just look back at the start of the recent five day rally. It started in just the opposite manner. The stock made six consecutive lower highs - once the stock traded above the previous high on 23 November, the stock moved up more than $10 in one week.

That’s the type of price action that this stock has delivered for the past month - the stock moves in one direction, but once the sequence of either higher lows or lower highs is broken the stock moves in the opposite direction.

Now that the “pattern” is obvious to us, let’s see if it continues.