Will Alphabet Feel The Heat Of Weak Earnings?
2022.04.27 15:26
Google parent Alphabet (NASDAQ:GOOGL) traded slightly lower yesterday but managed to stay above the key support zone of 2380, which has been providing support for the last few days. That said, after the closing bell yesterday, the tech giant reported weaker-than-expected earnings and revenue for the first quarter of 2022, with the stock sliding about 3% in extended trading.
Therefore, we expect to see a negative gap at today’s open, below 2380. This, combined with the fact that the stock is trading below a downside line drawn from the high of Apr. 4, paints a negative short-term picture.
A potential 3% negative gap would also take the stock below the 2340 zone, marked by the low of May 21, 2021, the break of which could carry extensions towards the low of May 19, at 2265, or the low of May 12, at 2230.
If there are no buyers near that zone either, we may experience larger bearish extensions, perhaps towards the 2125 area, which acted as a key resistance between March 5 and 16.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from near its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators detect slowing downside speed and support a slight bounce before the next negative leg.
However, given that the stock already slid yesterday in extended trading, we will not emphasize those two indicators for now. To start examining the case of a decent upside correction, we would like to see a clear rebound back above 2530, a territory that provided strong support between Jan. 24 and Apr. 18.
This could also confirm the break above the aforementioned downside line and may allow advances towards the high of April 20th, at 2640. If participants are not willing to stop there either, we could see them climbing towards 2685 or 2735 areas, marked by the highs of Mar. 11 and 3, respectively.
Alphabet 4-hour chart technical analysis.
