Stock Of The Day: Will Alphabet Break Its Downtrend?

Shares of Alphabet Inc. (NASDAQ:GOOGL) are moving higher on Friday. There is a chance that this is the beginning of a new uptrend.

As you can see on the chart, Alphabet is at a support level. It is also testing its recent downtrend. This is why we have made it our Stock of the Day.

Some pundits claim that there are no guarantees in the market. But they are wrong.

Markets are always trending. They are always going up, down, or sideways.  And whatever the trend is, it will eventually change.

If a market is trading lower, it is out of equilibrium. There are more shares for sale than there are to be bought. Traders and investors who wish to sell are forced to undercut each other's prices, and this results in a downtrend.

When the market or stock gets low enough, it will eventually get back into equilibrium. When this happens, the market will begin to move sideways. The forces of supply and demand are equal.

As a result of this sideways movement, the stock will cross or ‘break' the downtrend line. As you can see on the chart, this is the case with Alphabet. The downtrend that began in early February is over.

The shares also reversed off support around $297.

Stocks can have support at former support levels because of seller's remorse. A number of the people who sold their shares around $297 regretted doing so when the stock rallied.

When this happened, some of them decided to buy their shares back if they ever fell back to $297. So when they did, these regretful sellers placed buy orders, and this created support at the price again.

Alphabet has broken a downtrend after finding support at an important price level. There is a good chance that a new uptrend has begun.

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