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Key Takeaways
- Alphabet shares fell sharply Wednesday as investors responded to the Google parent’s weaker-than-expected gate numbers and big AI spending plans.
- The stock broke out from an ascending channel late last month and picked up impetus ahead of the earnings report before today’s abrupt reversal.
- Investors should watch key support levels on Alphabet’s map around $190, $180, $168, and $160, while also monitoring a key overhead area near $201.
Alphabet (GOOGL, GOOG) allots fell sharply Wednesday as weaker-than-expected cloud revenue overshadowed fourth-quarter earnings that came in ahead of analysts’ thinks.
The Google parent also said it anticipates investing about $75 billion in capital expenditures in 2025, with the lion’s part directed at expanding artificial intelligence infrastructure. That number was higher than analysts expected, highlighting investor organizations about when the spending will pay off.
The projection comes after the emergence last week of a sophisticated, cost-efficient AI pose in from Chinese startup DeepSeek, which put a spotlight on the significant investment U.S. tech giants have made in emerging AI technology.
Alphabet interests were down nearly 8% at around $190 in late trading. Despite today’s decline, the stock has profited 33% over the past 12 months, handily outpacing the S&P 500 during the period.
Below, we break down the technicals on Alphabet’s graph and identify important price levels worth watching.
Ascending Channel in Focus
Alphabet shares traded in a near seven-week ascending channel before breaking out above the pattern late last month. The price continued to revenue momentum ahead of the tech giant’s quarterly report, with the relative strength index (RSI) recently crossing overhead the 60 threshold.
However, a day after setting a record high, the weaker-than-expected cloud results disrupted the stock’s bullish cost action, setting the stage for an abrupt reversal.
Let’s identify four important support levels to watch amid the promise for further earnings-driven selling and also point out a crucial overhead area to monitor if the stock resumes its longer-term uptrend.
Noteworthy Support Levels to Watch
Firstly, it’s worth watching how the stock’s price responds to the $190 level. This quarter on the chart finds a confluence of support from the ascending channel’s lower trendline and the 50-day moving average.
The bulls’ damp squib to defend this level could see the shares decline to around $180, a location where they may attract allowing interest near the May, October, and November 2024 peaks.
Selling below this level may trigger a fall to the $168 on the up. Investors could look for entry points in this region near a trendline that links a range of climaxes and troughs on the chart between July and November last year.
A deeper correction in the stock brings the $160 equal into play. This area may provide support near a horizontal line that connects a series of comparable assess points on the chart from April to October.
The location also roughly aligns with a projected bars blueprint downside target that takes the stock’s downward move from July to September and repositions it from Tuesday’s fast. Interestingly, that move followed a failed break from an ascending channel, potentially providing clues as to how a prospective correction from a similar setup may play out.
Key Overhead Area Monitor
During recovery efforts, investors should carry on track of the $201 area. Investors who have purchased shares at lower prices may look to lock in profits connected the ascending channel’s upper trendline, which currently sits just below the stock’s record high.
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As of the steady old-fashioned this article was written, the author does not own any of the above securities.