Google Shares Recover Slight from Yesterday's Drop As US Govt Anti-trust Lawsuit Looms

Summary:

Google share price opens higher after yesterday's steep drop, even as antitrust lawsuit is readied by the US Department of Justice.

BREAKING: AP source: Justice Dept. expected to file lawsuit against Google in antitrust case, alleging abuse of search dominance. https://t.co/KJg0bibPdK
— The Associated Press (@AP) October 20, 2020

Google share price is down nearly % after the US Justice Department said on Tuesday that it would file antitrust proceedings against Alphabet Inc company Google. Reuters quoted a source close to the situation as saying that the company broke antitrust laws in fending off rivals to maintain its market standing.

In a report monitored from the Associated Press, the lawsuit is said to border on Google’s practices in its advertising and internet search businesses. The lawsuit alleges that Google deployed illegal tactics to keep its internet search engine dominant and position it to sell more ads.

This is not the first time Google is on the receiving end of antitrust lawsuits. In May 2019, the company was hit with a $1.7 billion fine by Europe’s antitrust regulators after the company was accused of illegally freezing our rivals in its online adverts business. At the time, that was the 3rd time in two years Google was fined.

Google is currently trading at 1543.84, or 0.91% higher on the day.

Technical Outlook for Google

Despite today’s higher open on the stock, Google share price would be fighting to overcome the bearish engulfing pattern, which is confronting the stock on the daily chart.

This engulfing pattern constitutes the reversal from point D on the harmonic pattern and represents a part of the “c” corrective wave in the broader 1-2-3-4-5 Elliot wave pattern. It is also a rejection move from the resistance at 1585.03, which is where prior highs of 21 July, 21 August and 12 October are located.

Rejection at the 1550.16 resistance (14-16 September highs) allows this down wave to continue, targeting the 24-25 June highs/5-7 August lows at 1470.45, with the possibility of a decline to 1427.95 (commencement of C wave in the XABCD pattern). Only a lower low that moves below the trough of the A wave will allow sellers to drive towards 1336.42, with 1292.90 also a medium-term possibility.

On the flip side, an extension of today’s ascent above 1585.03 invalidates the down wave from point D in the XABCD pattern and opens the door for further upside towards 1628.21, with the 26 August high at 1653.12 lining up as a potential upside target.