GOOG: Down From Stacked Resistance

From yesterday morning on GOOG:

"The Bears need to take out Black trendline #2-#4 and get moving on the downside, or The Bulls could turn it around. That trendline comes in today at 521.463."

The Bears did a good job of it, opening GOOG at 520.21, below trendline #2-#4, and closing the stock down for the third session in a row coming off stacked resistance after Tuesday's "Knuckle-Biter" close back inside the broken Rising Wedge.

Data Point #4 might have to be moved as the chart evolves, but the breakdown and retest failure of the Rising Wedge suggests some more downside.

For example:




As we've witnessed in the past, Bearish Rising Wedges/Channels (pattern in blue) often morph, or change, into a Bearish Head & Shoulders Top (pattern in black). The Right Shoulder rally, which we got this week, usually is a failure to regain and hold the broken Bearish Rising Wedge or Rising Channel, then the stock comes down and breaks the neckline, which hasn't yet occurred.

The high of this possible Right Shoulder is 547.05, which is a little higher than the 546.30 high of the Left Shoulder, which it "shouldn't be" if we're going to be strict about rules, which I'm not. Since the putative neckline is rising, it has the right look. The important thing is to see if: (1) the neckline breaks, (2) if the 510.50 low of the neckline gets taken down (Blue #2 in the first chart above), and (3) if the 490.86 low of the Bearish Rising Wedge at least gets tested.

The height of the putative H&S Top is about 36 points, so if the neckline breaks, that amount would be subtracted from the point of the breakdown to establish the target.





After yesterday morning's gap down to 520.21 and quick move down to 515.04, I watched for about an hour and decided to short GOOG at 520.25, near the opening price. That wasn't a great entry since there was a big gap that wasn't filled, but GOOG looked very weak, so I went ahead with the trade, planning to scalp a little.

I got squeezed to 524.00 on the rally to fill some of the opening gap. 519.50 (horizontal yellow line) was validated support. 519.50 finally got broken to the downside, but The Bulls established support just below there (horizontal white line), and were threatening to break back above 519.50. I didn't like that, so I covered my short there.



The Bulls managed only a minor breakout above 519.50, then The Bears reasserted themselves, took out minor support (the white horizontal line in the last chart) and took GOOG down.

At the high of the Symmetrical Triangle (pattern in yellow), the Bulls failed in that attempt to regain 519.50. The Bears broke the pattern to the downside and took GOOG to a new session low.

Game, Set and Match to The Bears in Friday's session. We'll have some tennis, for a change ;)



Gain: $800