100% Time Retracement

The last time I showed you Google stock was about $100 lower.  That was less than a month ago.

At that time, I pointed out an opportunity to go long on the daily time frame and a sell short opportunity on the intraday time frame.

In hindsight, it is obvious that taking a long position in GOOG was the way to go.

Now I want to show you how to identify a possible top using Fibonacci time analysis.

The chart above shows GOOG taking off to the upside on a gap up.  If you read the news, you know that Google announced better than expected earnings, etc.  That's the explanation for the recent run up in price.

Notice where price is stalling out.  

Right near the century mark, $400.  This isn't the first time for this stock that a round number has showed signs of slowing the upward price for Google stock.

In early November 2004, GOOG found resistance near the $200 mark.  In June 2005, the same thing, this time at the $300 level.  So this shouldn't come as any surprise that the stock "might" find resistance at current price levels.

Now take a look at the 30 minute intraday stock chart below for GOOG.

Notice that the end-of-day high for the 14th of November 2005 high is slightly higher than the 7 November 2005 high.

Now look at the Fibonacci time retracement labeled at the bottom of the page.

The recent high is within one hour of the 100% time retracement of the decline from the 11:00AM November 7 high to the 9:30 November 10 low.

That's the Fibonacci time retracement "evidence" that a high might be forming at these price levels.

So, what to do?

That depends on your time frame.  If you are a relatively short term trader in a long position, then tightening up a trailing stop to exit the position would be prudent.

What am I doing?  I'm in this one for as long as possible.  I'll revisit this stock again if and when the stock trades below the 10 November low (and will be looking for a fibonacci retracement) OR another significant fibonacci price or time retracement occurs at a higher price level.

Trade well!!!

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