Trading stocks in a range
Here is an example of mighty GOOG stock as it trades. Knowing the technical picture is important. The upper range and the lower range and how the stock may behave. Looking at GOOG we see the stock is consolidating in a long term range for the last four years since March 2008. The stock has not been able to break out from the upper 650 range and the trend line. It has done that only twice, in the last for years, and every time it did it , it fell back in the channel. Now GOOG has formed a smaller trading range which starts at 560 on the bottom and 650 at the top.
How would you trade this stock if you didn’t know you are hitting the upper trend line and a long term trend line ?
I would wait for GOOG to break above 650 on good volume and once the confirmation is there, initiate some long positions. Should you short $GOOG here? Probably not a good idea, because you don’t know if this will reverse or breakthrough this time. After all the trend is up since it got above its 50 day moving average and good earnings last month. Its up 60 points since that time. Bulls have become bolder and they may think it will just continue higher. But there is something to consider right here. Here is the video you can watch:
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