Deal would be Alphabet’s largest acquisition ever
Key learning points
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Alphabet’s stock will be in the spotlight on Monday after a report emerged Sunday that Google’s parent company is in advanced talks to acquire cybersecurity startup Wiz for about $23 billion.
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The stock hit a record high on Wednesday but closed lower the following week, potentially setting the stage for a pullback.
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Alphabet’s stock price may find support at key levels on the chart, including $175, $150 and $134.
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A bar pattern tracking the stock’s upward movement between March last year and January this year, overlapping from the March swing low, predicts a longer-term price target of around $215.
Alphabet (GOOGL) stocks will be in focus on Monday after the Wall Street Journal Google Inc. reported Sunday that Google’s parent company is in advanced talks to acquire cybersecurity startup Wiz for about $23 billion, citing sources familiar with the matter. If the deal goes through, it would be the tech giant’s largest acquisition ever.
Below we look at Alphabet’s weekly chart and use technical analysis to identify key levels to watch.
Weekly reversal amid falling trading volumes
Since bottoming out around the 200-week moving average (MA) early last year, Alphabet shares have continued to rise, with investors promptly buying the dips.
More recently, the stock climbed to a record high on Wednesday but closed lower for the week, potentially setting the stage for a retracement. It’s also worth noting that trading volumes have been trending down since the stock had a nearly 7% gap after Bloomberg reported in mid-March that the tech giant was in talks to license its Gemini artificial intelligence (AI) models to Apple (AAPL), which may indicate declining purchasing dynamics.
Keep an eye on these key levels during retracements
Should a pullback occur, investors should monitor three key areas where the stock is likely to find support.
The first area to watch is $175, where the stock may attract buying interest around a range of similar prices between late April and early June.
A close below this level could lead to a retest of the $150 area, a region likely to attract buyers near the rising 50-week MA and a key horizontal line connecting several previous record highs in the stock from November 2021 to January this year.
Further weakness could trigger a drop to around $134, with bargain hunters looking for cheaper buying opportunities near a multi-year trendline.
Check out this longer term price target
To gauge a potential long-term target for price appreciation, we can take the a-bar pattern of the stock’s upward movement between March of last year and January of this year and overlay it on the March swing low. This predicts a target of around $215, an area where the stock could face selling pressure, especially if other technical indicators point to overbought conditions at the same time.
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