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by Arthur Hill
After a bearish candlestick reversal in July and a decline below 285, Google is trying to hammer out a bottom and a bullish reversal.
Position: Hold
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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CANDLESTICK CHARTING
Google Trying To Hammer Out Bottom
08/15/05 10:41:45 AMby Arthur Hill
After a bearish candlestick reversal in July and a decline below 285, Google is trying to hammer out a bottom and a bullish reversal.
Position: Hold
| The stock formed an evening doji star in July. These three-candlestick patterns are bearish reversals that do not require confirmation with further downside. After surging above 310 with a white candlestick, the stock continued higher with a gap, then suddenly stalled to form a doji (red arrow). This showed indecision and the stock gapped down the very next day. Even though the black candlestick formed a long lower shadow, the essence of an evening doji star was clear and the stock declined further. See Figure 1. |
|
| Figure 1: Google formed an evening doji star in July. |
| Graphic provided by: MetaStock. |
| Graphic provided by: Reuters Data. |
| |
| The 62% retracmement mark offered a brief respite around 287 and the stock continued below 285 in August. A hammer formed on Thursday (August 11), and this was followed by an engulfing line on Friday (green oval). The hammer is a bullish candlestick reversal and the bullish engulfing shows buying pressure after a weak open. Note that the stock opened below the prior close and closed above the prior open. Both the hammer and the bullish engulfing require confirmation with further strength. |
| Candlesticks can offer a short-term clue, but it is wise to step back and look at the larger pattern. The stock formed a falling wedge over the last three to four weeks. These are typical for corrections. However, the upper trendline has yet to be broken. A break above the upper trendline would be positive and further strength above 300 would break the prior high. Such a move would call for a continuation of the prior advance and project further strength above the July high. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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