Alphabet (GOOGL) Analysis – Potential Downside RisksAlphabet is currently trading at $205. While it could still move higher, several factors might drive the price lower soon:
Extended Distance from 55 EMA:
The stock hasn’t touched the 55-day EMA for 147 days. While this doesn’t mean a pullback will happen immediately, a sharper downside move is possible.
Bearish Divergence:
The RSI has formed a lower high, while the price has made a higher high, signaling a potential bearish divergence.
Fundamental Risks – AI & Earnings:
Earnings Report on Tuesday:
Alphabet will report its earnings, and investors will focus on its high AI-related expenditures.
Revenue Growth Concerns:
The company may have experienced slower revenue growth in Q4 due to weakness in advertising and cloud services.
Competitive Pressure in AI:
Chinese startup DeepSeek recently launched low-cost AI models, raising concerns over a potential AI price war, which could impact Alphabet’s profitability.
While Alphabet remains strong, combining technical weakness and fundamental risks (earnings pressure, AI spending, and increased competition) could lead to a correction. If a pullback occurs, the 55 EMA could act as a key support level.
92% of positions are long. We all know the old saying—most people lose in trading. So if 92% of the market is long, we should at least be short for the moment.
This extreme bullish positioning suggests a potential contrarian opportunity, as overly crowded trades often lead to sharp reversals.
