Is GOOG showing positive RSI divergence?

Lets look at the price action in GOOG the past few sessions and breakdown the relative strength compared to the broader $NDX and $SPX markets.

The chart is showing a touch of the 200 day moving average at today’s lows. I drew the line from the break down bar two weeks ago to today lows and I want to compare the price action on 11/08 to the RSI plot. Then let’s look at the current price action today and the RSI plot. We see the RSI has slightly, and I mean ever so slightly, diverged as price makes new lows intra- day. If this is any indication of dip buying, we should see GOOG go through an aggressive bounce stage once the market finds its legs again.

GOOG should lead the way and exhibit a green day as the market dips red in my opinion. With aggressive price follow through higher, taking a leadership role for tech. That would be the best scenario. The only problem with this type of technical picture is the RSI is a lagging indicator and can sweep lower if GOOG gaps down and this entire theory is out the window. Watch the market and GOOG action at these levels closely through next week (Holiday week) and see if a long side swing trade is in the cards.

Nick Pirraglia

About Nickolas Pirraglia

Nick Pirraglia started his career in trading in 1991 after returning to the US as an Army Officer deployed in Iraq. He began as a bond broker and worked his way into trading. Expert mentoring, hard work and a disciplined approach to the markets has allowed Nick the ability to maintain a very successful career in Capital Markets and Trading for over 20 years as a professional OTC Market Maker and independent trader. Nick has also managed the trading desks for a two Dallas based capital management companies and traded equities for a Dallas based hedge fund. Nick has trained and mentored thousands of customers in the rigors of trading, technical analysis and risk controls. Recently, Nick had broadened his market experience through the design and product management of two automated trading platforms. He has the pleasure of working with some of the brightest minds in the trading community and has collaborated with experts in data, design, engineering and trading psychology. An avid long distance runner, Nick completed several marathon events, qualified for the Boston marathon, completed several long distance Triathlons to include finishing a full Ironman triathlon.
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