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Chart of the week: potential bullish reversal on Alphabet as earnings loom

Google

There's a potential bullish reversal sighted on Alphabet (owner of Google) as its earnings release looms.

Chart of the week – Alphabet (Google) 

Time stamped: 30 Jan 2022 at 12:30pm SGT (click to enlarge chart)

Source: CMC Markets

  • The recent 10-week of -17% decline seen on Alphabet (GOOGL) from its current all-time high of 3,018 printed on 19 November 2021 has managed to stall and staged a rebound with a weekly gain of 2.3% for the week ended 28 January; its highest gain seen in the last 4 weeks.
  • Alphabet will report its Q4 2021 earnings on this Tues, 1 February after the US session closes; consensus forecast is pegged at $27.65 earnings per share, +24% year-on-year increase from the same period a year ago.
  • Interestingly, positive technical elements have emerged ahead of its upcoming earnings release and after the recent -17% decline from its 19 November 2021 all-time high despite a breach below the key 200-day moving average that has occurred on 21 January 2022 and price actions remained below the 200-day moving average without a daily close above it for the whole of last week.
  • The share price of GOOGL has formed a weekly “Bullish Piercing” candlestick pattern right above its key long-term pivotal support of 2,455 which is defined by a confluence of elements; the major ascending trendline from 23 March 2020 low which represents its current major uptrend phase that is still intact, 23.6% Fibonacci retracement of the current major uptrend phase from 23 March 2020 low to 19 November 2021 high and 2 times Fibonacci expansion of the recent decline from 19 November 2021 high to 6 December 2021 low projected from 27 December 2021 high.
  • In addition, the daily RSI has just reversed up from its oversold region which suggests that the recent medium-term downside momentum of the 10-week decline from 19 November 2021 high has abated.
  • Watch the 2,455 key long-term pivotal support and a break above 2,674 may add impetus to kickstart a potential brand new medium-term impulsive up move sequence towards 2,857 before the all-time high area of 2,966/3,012 in the first step.
  • On the flipside, a break with a weekly close below 2,455 damages the major uptrend phase in place since 23 March 2020 low to open up scope for a multi-month corrective decline towards the next support at 2,190 in the first step.


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