Sunday Doji Dojo Analysis: GOOGL

Every Sunday, we will go through our list of dojis for the week and see if there is one stock worth taking a look at. This will not be any recommendation to buy or sell. Instead it will be more of a recap of how the stock performed after the doji alert was posted.

This Sunday we will cover Alphabet, Inc (GOOGL) which was posted on June 17th.

On June 17th, Alphabet, the parent company of Google, popped up in our doji scanner. The doji had a size of 27 points and was the second consecutive trading day of indecision, as the previous day also showed the potential of a doji candle.

Two signs were pointing in favor of a downward reversal in this stock. The first sign was a failure to break the previous recent high. On June 10th, GOOGL made a high of 1472. Then a week later on June 17th, the stock price was approaching the recent high, but broke down in the last few hours of trading. Now if there were any demand and belief that this stock would and should go higher, there should have been a push to break the recent high of 1472. However, the bears took control in the last couple hours pushing the price down to 1446, then the bulls tried a counter attack up to 1454 in the last minutes of trading, but still ended up pushed down to close at 1452.

The second sign was a recent lower low. On June 15th, GOOGL broke the 1400 level down to 1387. The previous recent low was at 1406 on June 4th. A lower established low can bend the upward trend. As chartists will use lines to model bullish trends, the lower low will break these lines and signal a loss in bullish momentum. See the figure for the example of a breaking of the trend line and a failure to climb back above the line.

The breaking of the line will force the line to be redrawn at a lower slope or force an acceptance that the trend line is broken and no longer useful. All this said, a confirmation is still needed in the next trading day to see if bearish momentum will increase.

On June 18th, a battle between the bears and bulls occurred straight out of the gate in the first hour of trading. The bulls tried to break above the previous close, but ended up being pressured by bears with strong selling. At the end of this trading day, it opened lower and closed lower.  Then there was a similar story that happened on the June 19th.

The stock market is a constant battle between bulls and bears. If the bulls are showing any weakness; the bears will act like sharks that smell blood in the water, then become more aggressive. In the next few days if the bulls cannot get a catalyst from the overall tech sector to go higher or positive news for GOOGL, a new downward trend line could be drawn out of what was an amazing bull run in the recent months. Remember anything can happen in these markets, be agile and adapt fast. Best of luck!