Key Takeaways
- Alphabet shares rose on Friday after the Google parent reported quarterly results that exceeded Wall Street expectations, amid AI-fueled growth in search advertising.
- In Thursday’s trading, the stock broke out above the top trendline in a descending channel. This set the stage for the post-earnings boom today.
- Investors should watch crucial overhead areas on Alphabet's chart around $168, $182 and $196, while also watching a critical support level near $155.
Alphabet (GOOGL), the parent company of Google Inc., rose on Friday after it reported quarterly results that exceeded Wall Street’s expectations due to AI-driven search advertising growth.
The tech giant said that AI integration in Google search has helped drive ad growth. Features like AI Overview have also driven user engagement. Alphabet reiterated its plans to spend $75 billion in capital expenditures this year, most of which is expected to go toward building out the company’s AI infrastructure.
Alphabet’s shares were up around 1.8% in late trading at $162 as several analysts raised the price target for the stock following the strong earnings report. Despite gains made over the last week, the stock has fallen 15% since the beginning of this year due to fears over whether the AI infrastructure investment will pay off.
Below, we examine the technicals of Alphabet’s chart and identify critical price levels that will be watched by investors.
Descending channel Breakout
The price of Alphabet shares has been trending lower in a descending channel for most of this year. Recently, the 50-day MA crossed below the 200-day MA, forming an ominous Death Cross, a chart pattern which signals lower prices.
In Thursday’s trading, the stock broke out above the upper trendline, which was the catalyst for today’s gains.
The relative strength index (RSI), however, flashes a neutral readout, but is still well below levels of overboughtness, leaving ample room for further gains.
Let’s identify the three key overhead areas in Alphabet’s graph where the shares could be under pressure from overhead selling. We’ll also locate a crucial support level that’s worth watching during retracements.
Important Overhead Areas To Monitor
The first area worth monitoring is at $168. This area on the chart could provide overhead resistance near the trendline that links several peaks and valleys on the graph extending back to the end of July last year.
If you buy above this level, the price could rise to around $182. Alphabet’s shares could run into sellers near the swing high of last November, which is closely aligned with the opening price for a stock gap early December.
The next area of interest is at $196. Investors that bought the stock for lower prices can look to take advantage of profit taking opportunities near the upper range. This consolidation period was visible on the chart through most of January and December.
Critical Support Levels Worth Watching
Finaly, a loss in buying momentum could lead to a drop back to around $155 Alphabet’s shares are likely to attract interest near the breakout point of yesterday, an area which also roughly aligns with the early August swing low in 2024.
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