In less than 5 month Google Inc. (NASDAQ: GOOG) shares have gained over 30%. The rally managed to break easily 800 dollar per share level. After hitting a high at 844, the price plunged back to 800, but o lower volume, meaning that investors are not that eager to sell.
A full throwback of 8.5 percent will retest the 760 – 780 support area. In this zone the demand may increase because let’s not forget that we can find here the last top, the uptrend’s line 50% retrace of the latest rally and 38.2 retrace of the full trend. A rise in the demand may trigger a reversal which might just mean a beginning of a new impulse.
Looking at the uptrend evolution from R.N. Elliott’s Wave Theory point of view, we will observe that this might just be a wave 4, the last corrective move in a 5 wave cycle. Keeping in mind the rule of alternation, and that wave 2 was an irregular correction, we can expect this one to be a simple zigzag move. The target for the last wave of the cycle can hit even 2.618 of the first wave.
As a conclusion a reversal sign around $770 per share would suite me just fine.