Alphabet’s (NASDAQ:GOOG) stock witnessed a 7% surge at the start of Monday’s trading session, spurred by reports of active negotiations between Apple and Alphabet regarding the integration of Google’s Gemini AI engine into the iPhone ecosystem.
This collaboration aims to introduce novel AI-powered features in the upcoming iPhone software release, potentially revolutionizing the capabilities of Apple’s flagship device.
Despite witnessing a solid start at the open, Alphabet’s stock again faced significant resistance above $150, paring most of the gains it made earlier in the day and closing at $148.48. But why did the stock find it hard to sustain itself above $150? Let’s find out.
The elusive $150 markThis is not the first time that Alphabet is struggling to cross above the $150 mark. Once we zoom in on the long-term charts, it becomes evident that the stock has halted at this resistance multiple times in the past.
During the post-COVID outbreak rally commencing in mid-2020, Alphabet’s stock experienced a remarkable surge, catapulting from the $50 mark to the coveted $150 level—a staggering 300% increase, as delineated by uptrend 1 in the chart.
Despite multiple attempts to breach this significant threshold, notably in November 2021 and January 2022, these endeavors ultimately proved futile, resulting in what can now be classified as false breakouts. Subsequently, the failure to surpass $150 precipitated a downtrend, which endured until early 2023.
In the ongoing bullish phase, denoted as uptrend 2, Alphabet once again endeavored to surpass the $150 mark following the release of its stellar Q4 earnings on January 30. However, history repeated itself as the stock faltered yet again, unable to surmount this formidable barrier.
Given the recurrent impasse at $150, one might question the optimism of bullish investors regarding the stock’s future trajectory. Will Alphabet’s shares manage to ascend beyond this elusive threshold, or are they destined to languish below it indefinitely?
Short-term technical indicators pointing northwardIn the current market scenario, short-term technical indicators are pointing decisively towards a bullish trajectory for Alphabet Inc. Investors bullish on the stock have multiple reasons to celebrate.
While Alphabet’s inability to close above $150 on Monday may seem like a setback, the underlying momentum on short-term charts remains robust. One of the primary indicators favoring bullish sentiment is the fact that Alphabet is trading above its long-term bullish trendline (uptrend 2). This signifies a sustained upward momentum, providing an advantageous position for bulls.
As long as the stock maintains this position, bullish investors are likely to maintain dominance in the market. Additionally, both the shorter time frame Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) indicators have yet to show any signs of the upward trend losing steam.
In light of these indicators, it is prudent for bullish investors to consider a strategic approach centered around buying on dips, capitalizing on temporary downturns in stock price until it breaches the recent swing low of $132.05.
This strategy not only leverages potential opportunities for accumulating shares at advantageous prices but also aligns with the overarching bullish sentiment.
Conversely, for those inclined towards a bearish stance, there exists a potential, albeit high-risk, opportunity to short the stock, with a prudent stop-loss set just above $155.
However, caution must be exercised, as Alphabet has historically encountered formidable resistance at this level, suggesting the potential for a swift and substantial rally should this barrier be breached.
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