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Chart Of The Day: Trading Google's Strong Earnings

Published 2018-07-24, 10:01 a/m
Updated 2023-07-09, 06:31 a/m

Alphabet (NASDAQ:GOOGL) stock continues to charge higher after it jumped over 5 percent in after-hours trading, as the e-retailer posted strong results for the three months ending June 30. Where is it headed next?

Alphabet Daily Chart

Trading has been forming a bullish falling flag, in which time bulls take profits following a 10-percent jump in the two weeks between July 2 and July 15, allowing new-comers to pick up the slack and charge the next rally.

An upside breakout would signal that profit-taking has ended and that traders are prepared to resume the rising channel since April.

Trading Strategies – Long Position Setup

Conservative traders would wait for a new peak, above the 1221.59 posted Wednesday, to confirm the uptrend, followed by a likely return move to retest and prove the flag’s support, with at least one long, green candle following a red or small candle of any color.

Moderate traders may be satisfied with a close above the flag. While they may wait for a potential return-move for a better entry, they may not necessarily wait for proof of demand.

Aggressive traders may enter now, if they can afford a stop-loss below the 1190 flag support – or accept a measured loss – considering the potential volatility ahead.

Equity Management

Do not enter trades before ensuring a minimum of a 1:3 risk-reward ratio, to maximize statistical odds.

Trade Sample

  • Entry: 1200
  • Stop-loss: 1100 Risk: 100
  • Target: 1500 Reward:300 R
  • Risk-Reward Ratio: 1:3

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