In other GOOGL news today, it was reported that the EU has hit the company with a €1.49B fine for stifling competition in the online advertisement sector. So on the face of things it looks like perhaps some bullish news and some bearish news.
Let's see what the charts and indicators are suggesting.
In the daily bar chart of GOOGL, below, we can see the decline from August to late December, and the price recovery since then.
Prices have rallied for nearly three months, but the indicators are not particularly strong. Yes, GOOGL is above the rising 50-day moving average line and the modestly rising 200-day line, but these are lagging indicators. The 50-day line could rally above the 200-day line soon and that would be a (bullish) golden cross signal, but these signals are typically late and historically not all that successful for investors.
The volume pattern shows a volume spike in late December as prices made their low, but not a pattern of increasing volume since. The daily On-Balance-Volume (OBV) line did not make its low until the middle of January, and it has only crept slightly higher, suggesting only modest buying.
The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in January for an outright buy signal, but the two moving averages that make up this indicator are close to a bearish crossover now.
In the weekly bar chart of GOOGL, below, we see a possible head and shoulders top pattern with mixed indicators.
GOOGL has rallied from around $100 way back in 2005 to around $1,200 now. What does that mean? Simply that GOOGL has something to reverse and that is the first part of looking for a major top pattern.
Next is the shape -- I can see a "left shoulder" at $1,200 in January 2018. There is a pullback to around $1,000 in April and that is the start of the "neckline".
Prices rally to a "head" near $1,300 in August, followed by a decline to November/December to the neckline again. The move up this year could be the "right shoulder".
Trading volume does diminish from early 2018 and that is another "tell" of a top pattern.
The weekly OBV line is lower now than in January 2018 and August 2018. The weekly MACD oscillator is very weak but trying to cross the zero line for a buy signal.
In this Point and Figure chart of GOOGL, below, we can see that prices are close to their upside price target of $1,229. Prices could go higher, but this is a good time to think about risk and reward.
Bottom-line strategy: Has GOOGL made a major top pattern? Maybe.
We will need to see that neckline broken around $1,000 on heavy volume to know for sure, but meanwhile the rally from late December has been on shrinking volume, and that is certainly not a positive in my book. Longs should reduce their exposure (take profits) or raise stop protection to a close below $1,160.