After Google parent Alphabet (NASDAQ 🙂 releases Q4 results on Tuesday, Feb. 2 after the close, we expect the stock to rise significantly.
Consensus calls for company to report $ 15.7 EPS, slightly higher than last year's $ 15.35. More impressively, the revenue forecast is likely to reach $ 52.89 billion, up from the $ 46.98 billion recorded in the same quarter last year. That Google has managed to expand amid the worst health crisis in a century tells the whole story.
In essence, the world's largest search engine is predicted to experience massive advertising growth in 2021. That has prompted Wall Street analysts to issue a strong buy recommendation on the stock.
JPMorgan analyst Doug Anmuth predicts a 19% increase in revenue growth for Google Search and a 38% increase for YouTube's ad business. Anmuth also foresees that the tech giant's cloud business is finally approaching profitability after years of heavy spending on the project. He also expects further commercialization of Waymo, Alphabet's autonomous driving subsidiary.
Technically, the price has reversed, which would have been a bearish pattern, and turned bullish.
The price traded on an H&S top pattern, showing a weakening upward trend, which then turned into a downward trend. However, on January 20, the price shot up 5.4%, blowing out the pattern. The move left analysts perplexed, unable to find a specific reason for the jump.
While there was mixed news about the company that day, there was probably no immediate catalyst. Some pointed to Netflix's (NASDAQ 🙂 burst of Q4 results from the previous day as the engine for a broader tech rally as investors regained optimism about the sector.
Then, last Wednesday, renewed reports of possible government control and regulation in Europe put pressure on the stock, which plummeted by 4.5%. The shares coincided with other mega technology companies.
The price then found support right at the top of the failed V&G pattern. The nature of supply and demand is perfectly illustrated here, the way in which it is constructed and vice versa. The same thing happened between the September 2 high, a resistance that aligned seamlessly with the H & S's (red) neckline, and the way it turned into a support.
As such, we consider the recent tech sell-off as part of a return movement to retest the integrity of the H&S. Once it proves it can withstand the sale, the price should pick up and get even higher.
In addition, the return movement itself within a falling flag is bullish after the preceding 12.4% rise within just four trading days. If demand exceeds supply as we expect, triggering an upward breakout, the flag would set its own upward momentum and amplify the upward pressure from the V&G, which turned from a top to a follow-up pattern.
] Trading Strategies – Long Position Setup
Conservative traders should wait for another high to continue the uptrend.
Moderate traders would wait for the falling flag to break out.
Aggressive traders could take a long time now, provided they understand, accept, and be prepared for the risk.
Here's an example:
Trade Sample
Entries: $ 1,835
Stop Loss: $ 1,800
Risk: $ 35
Goal: $ 2,000
Reward: $ 165
Risk: Reward Ratio: 1: 5
Author's Note: This is only a trade sample, not the actual analysis. Read the message for the analysis. Keep in mind that the analysis is not prophecy. We don't know the future. It is only intended to explain the market dynamics and identify the most likely price trajectory. Analysis can also be wrong. Finally, your timing, budget, and temperament can affect the transaction. You need to adapt a trading plan to your personal circumstances. If you don't know how to do it yet, take small risks while you learn.
