Google's Glaring Gaps - Going Up or Down?
As GOOG chops sideways with low volatility and a lack of ATR (average true range), the chart shows two glaring gaps -- one above current price, and one below.
To effectively handicap which Google gap gets hit first, let’s take a look at the facts:
- Registered an all-time high price print of 988.25 on 6/6
- Enjoyed a 13-session rally before plotting a FNH (failed new high) at 986.20 on 6/24
- Suffered a 3% opening gap down (followed by a 13-session swoon to the recent intraday swing low of 905.58)
After setting an all-time high of 988.25 back on 6/6, GOOG enjoyed a 13-day rally before setting a failed new high at 986.20 on 6/24. The following session saw a 3% gap down on the open, followed by yet another 13-day selloff down to the recent intraday swing low of 905.58.
So as it sits at 922.22, the gap above occupies the 960-970 range, while the gap below is barren from 875-900.
This means that the upside gap fill target is 47.78 points, while the downside gap fill target is 47.22 points. Only time will tell which gap gets filled first, but the bearish argument certainly has more going for it.
Currently sitting at 922.22, GOOG’s:
- overhead gap (exhaustion gap) spans the 960 - 970 range; and
- underneath gap (breakaway gap) left chart space barren between 875 - 900.
To simplify and sum -- where an Alphabet gap fill pinball play would target -- this means that:
- the upside gap fill target is 47.78 points overhead (5.18% up); and
- the downside gap fill target is 47.22 points below (5.12% down).
While only time will tell which gap gets filled first, it is possible that the 6/24 FNH (failed new high) just below yuuuge round number 1K was followed by a ‘breakaway’ gap to the downside (if long-term downward price pressures prevail). A breakaway gap is a rare type of gap that often remains unfilled.
On the flip side of the Alphabet-coin| bull outlook -- the wide 875 - 900 open gap of 4/28 took place amidst a prolonged rally and did not lead to a continuous breakout. This is ‘the type’ of gap that virtually always fills.
Until GOOG experiences an increase in volatility and ATR (average true range) we should not expect much issue-specific excitement (Google Manifesto & Goolag Echopeligo PR $#!+storms aside). That said, a break and close below 900 will be strong confirmation of a continued selloff down to fill the gap at 875 (and possibly even the mini gap on 4/24 at 845).