Google (GOOGL) - Jan 25th 2024
The magnetic power of all-time highs
Higher timeframe context
A lot of these tech mega caps have been making new all-time highs lately. Even META has climbed over 300% from its 2022 lows to finally make new highs.
Google is one of those names that has been lagging a bit. However, when a stock is so close to all-time highs, price will most likely get drawn to new highs like a magnet. We went over this phenomenon in a past review.
Weekly chart
Price is approaching all-time highs after finally breaking the $140 resistance area. The momentum is not too strong so far, but again, at this point it’s the only tech mega cap that is still below its previous all-time highs. We can expect these to hit soon.
Daily chart
Don't get fooled by the form of that last daily bar. It's not the strongest bar, but it still closed +1% with respect to previous day's close. It's certainly not a trend bar and of course we can tell by the top wick that there was some selling after buyers tried to bid the stock up, but the day closed green and held above that previous red bar's highs, leaving a notable gap below.
Hourly chart
Not much to go over on this hourly chart. We have two levels of reference for long trades, as well as the $150 psychological mark. These give us references to trade off of.
Pre-market action
Here is where things get interesting and this name is brought to our attention. Stock is set to open above the $150 psych. level. We can see how buyers broke the first $149.66 level after some back and forth, and eventually managed to take over the $150 as well. Note that previous day highs are at $149.85, so any sellers that have open positions are now at a loss. All these ingredients give us a bullish outlook for this day.
The trade
As we'll see, this is one of the most straightforward setups you can get.
Let's do our CPT:
Cue(s)
Stock nearing all-time highs magnet level (lagging vs all its tech peers)
Gapping up above level, $150 psych mark, and prev. day highs
Intraday cue: Level bounce straight off the open
Intraday cue:: Intraday higher low at the $150 mark (confluence with prev. day highs)
Plan
As with most of our opening drive plays, our plan is always to wait for a test of a level and watch how price reacts to it to give us certainty that [in this case] buyers are in control. Then, we usually either get in as price reclaims the opening print or we wait for an intraday higher low to form to trade off of. Both would've worked on this day.
Trigger(s)
Price trading above the opening print or price triggering a buy setup at an intraday higher low.
5m chart
There were a couple options to get involved on this 5m chart and both worked wonders.
First one triggered the moment price got back above the opening print, and although price does pull back to the $150 area, it never gets even close to the stop level. In fact, on that $150 area it offers a beautiful buy setup that would lead to the big leg up into all-time highs and beyond. You could either target the $151.22 level above, the previous all-time high level of $151.55, or -as we normally do with intraday trades- just trail your stop as price keeps climbing.
I generally use pivots to trail, but in this case there was a couple exceptions:
T2 is set the moment price closes above the $151.22 level.
T3 is set the moment price makes new all-time highs.
Closing notes
Once again, this trade comes to show the magnetic power of these liquidity areas on the higher timeframes. Markets need liquidity to move, so it's natural for price to go and hunt that liquidity. You can see this everywhere, but especially on these obvious higher-timeframe levels, it's always good to stay alert.
I am posting one trade writeup every day throughout 2024. I focus on large caps using levels and price action. The subscription is absolutely free and will always be. I will strive to provide value by offering clues and ideas for you to enhance your edge. Let’s grow together!