The Alphabet stock has lost momentum because it has not been able to break the July resistance of $197.95. The price pattern was a bearish daily Doji pattern, which is a warning that buyers have met resistance at this price. This Doji was run as a triple top, which appeared at a position slightly below the 200 zone, which is an indication that the sellers were on the ground and pushing the price down. This failure to breach through this resistance has increased short-term caution among traders who had been anticipating a clean breakout.
The triple top pattern has traditionally been regarded as a warning that a stock is losing its steam. In this instance, a series of rejections close to the same price have formed a psychological dump on the market. The Doji contributes to that caution since it indicates a balance between buying and selling pressure, a common precursor to a direction change. Now, traders will observe whether the price continues to support the anticipated levels or whether fit would drop further.
On the bigger picture, Alphabet has a strong set of fundamentals that might box out any additional erosion. In its latest quarterly performance, it registered encouraging revenue, with its search and advertising business being strong. It has also been maintaining a positive overall investor sentiment despite the short-term hesitation shown by the chart.
Provided that the stock succeeds in remaining above its important support areas, then buyers may flock back to give the stock another go at a breakout. After a break above the 200 class, the Feb highs can be rapidly attained. The short-term outlook can become more defensive and would be selling pressure that persists and pushes the price below support. At the moment, the market is in wait-and-see mode, pitting the solid fundamentals against the evident technical resistance that has, thus far, prevented Alphabet from moving higher.
