As Google Parent Alphabet Continues To Fall Here's Where To Watch For The Bounce

Alphabet Inc GOOG GOOGL was sliding an additional 1% at one point to a new 52-week low Wednesday after a big bearish day on Tuesday saw the stock fall 5.32%.

A downturn in the general markets, amid a stubbornly tight labor market ahead of the Federal Reserve’s decision on interest rates had the markets spooked.

The CME FedWatch Tool puts odds at nearly 90% of the Fed raising rates by 75 basis points this afternoon for the fourth time in a row.

Read more about what one analyst sees ahead of the Fed’s meeting

Alphabet is also still suffering from a bearish reaction to its Oct. 25 worse-than-expected third-quarter earnings print, which caused the stock to close down almost 9.6% the following day.

Soaring inflation and rising interest rates could cut spending further in the lead-up to the holiday season, which could further negatively impact Google’s top and bottom lines during the fourth quarter as YouTube advertisement spending continues to decrease.

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The Alphabet (GOOG) Chart: Alphabet confirmed a new downtrend on Tuesday when the stock printed a lower low under the Oct. 27 low of $91.90. The most recent lower high within the trend was printed on the following day at $96.86.

On Tuesday, Alphabet printed a bearish engulfing candlestick, which indicated lower prices were likely to come on Wednesday. If the stock closes Wednesday’s session near its low-of-day, Alphabet will print a bearish Marubozu candlestick, which could indicate lower prices will come again on Thursday.

Eventually Alphabet will show signs that a bounce, at least to print its next lower high, is on the horizon. Traders can watch for the stock to print a reversal candlestick, such as a doji or hammer candlestick, to indicate a reversal.

A bounce is likely to come soon because Alphabet’s relative strength index (RSI) is measuring in at about 34%. When a stock’s RSI nears or reaches the 30% level it becomes oversold, which can be a buy signal for technical traders looking to scalp a bullish position.

Alphabet has resistance above at $94.82 and $97.79 and support below at $89.62 and $86.08.