With a number of mega cap technology and communication stocks struggling to maintain positive momentum after their recent gains, Alphabet Inc. (GOOGL) appears to be separating itself from the pack. With a decisive move above the 200-day moving average this week, there could be much further upside for this tech giant. The bullish case for GOOGL really started back at the April low, where the stock reached an oversold condition as it retested key support from May 2024. Subsequent lows in April and early May confirmed this support level, and suggested limited downside beyond what had already played out. Over the last two weeks, Alphabet has managed to pound out a short-term pattern of higher highs and higher lows. GOOGL popped above the 50-day moving average earlier this month, setting the stage for this week’s move back above the 200-day moving average for the first time since February. For a chart like Alphabet, the key is holding the 200-day moving average. So what would give us confidence that the stock will hold this important long-term trend barometer? Increased volume during the advance would certainly improve the chances of further upside for this tech giant. The On Balance Volume indicator (second panel above) has been trending higher in recent weeks, suggesting that up days have been marked with stronger volume readings. The Chaikin Money Flow indicator has remained mostly above the zero level in May, confirming that the stock is in an accumulation phase. We would want to see additional confirmation with an upward-trending On Balance Volume, as well as the Chaikin Money Flow (last panel above) remaining above zero, to confirm that additional buyers are coming in to push the price ever higher. What sort of upside potential targets would make sense given the patterns we’ve observed thus far? I would say GOOGL is featuring a classic inverted head-and-shoulders pattern, yielding an upside target near the all-time high from February 2025. Going into the April low, we can see a clear pattern of lower highs and lower lows off the February peak. Then the higher low in May, on less negative momentum readings, suggested a potential inverted head-and-shoulders pattern. The key with this particular pattern is for the price to break above the “neckline” formed by the swing highs between the head and the two shoulders. GOOGL powered above the neckline last week, completing this classic bottoming pattern and unlocking a minimum upside objective based on the height of the pattern. Using the April low and the neckline, we can calculate potential upside to around $197. This would put Alphabet back into the gap range from the initial downside move off the February peak. With our major equity benchmarks stalling out after an aggressive rally off the April low, Alphabet stands out for a tactical breakout above a key resistance level. As long as momentum and volume readings remain supportive, we could see much further upside for this search-and-cloud powerhouse. -David Keller, CMT marketmisbehavior.com DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
