The Google Class C stock tumbled on Friday, breaking below the uptrend line drawn from the low of June 3rd, and then, below the support (now turned into resistance) of 1160, marked by the low of August 14th. Combined with the fact that the stock is also trading below the downside resistance line taken from the high of July 26th, this paints a cautiously-negative picture in our view.
If investors are not willing to buy shares at current levels, then they may allow a test near the low of August 5th, at 1139, the break of which may extend the decline towards the 1124 area, which provided support on July 22nd and 25th. If there is no interest in the stock even at that level, then we may experience extensions towards the 1105 hurdle, marked by the low of July 9th, or the 1092 zone, near the low of July 1st.
Looking at our short-term oscillators, we see that the RSI dipped below 50 and now points down, while the MACD lies fractionally below both its zero and trigger lines. These indicators suggest that the momentum has turned negative and support the case for some further near-term declines.
On the upside, we would like to see a strong recovery above 1205 before we start assessing whether the outlook has become brighter. Such a move may initially aim for the 1226 zone, marked by the low of July 26th, when the stock opened its trading session with a big positive gap. Another break, above 1226, could carry larger bullish implications, perhaps paving the way towards the high of that day, at around 1265.
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