OVERVIEW:
GOOGL has displayed a significant shift in its price action on the daily timeframe, transitioning from a corrective bearish phase into a confirmed bullish structure. A classic reversal pattern, followed by a successful retest of a critical level, suggests strong upside potential towards predefined resistance zones.
KEY OBSERVATIONS & MARKET STRUCTURE:
1. The Reversal - W-Formation / Double Bottom:
o Following an extended retracement from its previous highs, GOOGL formed a clear "W-Formation" or a bullish double bottom pattern. This pattern indicates that sellers lost control at the lows, and buyers stepped in to reverse the trend. The zig-zag lines highlight the swings of this reversal structure.
2. Break of Structure & Confirmation:
o The crucial element of this pattern was the break above the neckline (or intermediate resistance) of the W-formation, marked by the horizontal green zone. This breakout signaled a shift in the market structure, indicating that buying pressure was overcoming selling pressure.
o Subsequently, price has executed a textbook "Retested Support" of this breakout level (the lower green rectangle around $163.00 - $167.00). This retest, where former resistance acts as new support, is a high-probability confirmation signal for continuation of the new bullish trend. The current price action is bouncing precisely from this zone.
TRADE IDEA & POTENTIAL OUTLOOK:
Based on the confirmed bullish structure and the successful retest of support, a long opportunity presents itself:
• Entry Zone: Entries can be sought around $168.00 - $170.00, following confirmation of a bullish candle bounce from this level.
• Stop Loss (SL): A logical stop loss placement would be just below the "Retested Support" zone, specifically below the recent swing low and the lower boundary of the support area, indicated around $163.19. This placement protects capital if the bullish structure fails.
• Targets:
o 1st Target: 181 to 183 (Green Rectangle): This zone represents a prior supply area or a significant resistance level from earlier price action. It's the immediate upside objective where we might see initial profit-taking or a temporary pause.
o 2nd Target: 191 to 193 (Upper Green Rectangle): This serves as the secondary, more ambitious target. It's another historical area of price reaction, representing the next major supply zone that price could aim for if momentum carries it through the first target.
INVALIDATION:
• The bullish thesis would be invalidated if price decisively breaks and closes below the "Retested Support" zone ($163.00). A sustained break below this level would suggest that sellers have regained control, potentially leading to a deeper retracement or continuation of the previous bearish trend.
CONCLUSION:
GOOGL is showing compelling technical strength on the daily chart. The combination of a strong reversal pattern (W-formation) and a textbook retest of broken resistance, now acting as support, provides a high-probability long setup. Traders should monitor price action for a sustained move from the retested support towards the identified upside targets.
Risk Management is Paramount: Always ensure proper position sizing and adherence to your stop-loss to manage potential downside.