GOOGLE: Clear pattern of behavior begins to give warnings!!!On February 4th, Alphabet (Google) presented its results. The figures were positive, and show that the company's business continues to grow at a good pace (+13%). However, the slight disappointment of the cloud storage business caused the market to react with significant falls on the day of its publication (-7%) (February 4th). Since then it has not stopped falling, reaching a cumulative fall of almost -12% from its highs.
---> What does it look like technically?
If we look at the graph, there is a clear PATTERN of BEHAVIOR that has been repeated on the last 2 occasions in which Google experienced a correction phase.
---> What PATTERN are we talking about?
What is clearly observed in the graph is that the following 4 warnings occur (one after the other), before starting a new bullish impulse to attack highs:
1) Oscillator warns of overselling (blue diamond that can be seen in the oscillator at the bottom. I have painted a vertical blue line).
2) Once the oversold signal appears, the price is supported by its bullish trend line, which also always coincides with a Fibonacci retracement of between 50% and 61.8%.
3) The bullish (Bull) signal of MOMENTUM appears.
4) The FORCE also turns bullish (Bull) (the candles turn blue).
--> What happened today?
The oversold signal has appeared again in the oscillator (point 1), and it has also been supported by its bullish trend line which coincides with a Fibonacci retracement of almost 61.8% (point 2).
---> What do we need now to be sure that it will go for new highs?
That both the MOMENTUM and the STRENGTH turn bullish (Bull). At the moment they are still bearish and therefore we have to wait.
--- What strategy can we follow?
1) Aggressive profile: Enter long when the MOMENTUM turns bullish (Bull). (at point 3).
2) Conservative profile: Enter long when the MOMENTUM and the STRENGTH turn bullish (Bull). (enter long when point 4 occurs).
If everything goes as normal, tomorrow it is VERY LIKELY that we will see the bullish (Bull) MOMENTUM signal and therefore, we will be able to think about whether or not to go long depending on our investor profile.
Greetings and good trading!