Internet content giant Alphabet Inc. (GOOGL) has had a volatile ride all year, with ups and downs that have stabilized at or just below its 200-day simple moving average. As 2018 began, Alphabet shares traded as high as $1,198.00 on Jan. 29. At that time, the weekly chart showed the stock as an "inflating parabolic bubble." This warning led to a correction of 16.8% to a low of $997.00 on Feb. 9. This proved to be a buying opportunity, as the 200-day simple moving average of $1,003.38 held at this low.

Alphabet stock rebounded by 18.2% from this low to a secondary high of $1,178.16 set on March 12. The downside was not over, as the stock declined 16.5% to its 2018 low of $984.00 set on March 26. Between March 26 and May 4, the stock traded back and forth around its 200-day simple moving average as it rose from $1,024.11 to $1,034.69, respectively, which proved to be a buying opportunity. From the low, the stock rose by 16% to its all-time intraday high of $1,201.49 set on June 20. Shares of Alphabet closed at $1,141.29 on Thursday, up 8.3% year to date and up 16% from the March 26 low of $984.00 set on March 26. The stock is 5% below its June 20 high. (See also: Alphabet Has Been Holding Key Levels All Year Long.)

The daily chart for Alphabet

Daily technical chart showing the performance of Alphabet Inc. (GOOGL) stockCourtesy of MetaStock Xenith

The daily chart for Alphabet clearly shows the importance of a rising 200-day simple moving average, which shows an uptrend, as the stock began the year above a "golden cross," indicating that higher prices would occur. Note the numerous buying opportunities on weakness to the 200-day simple moving average. The lowest horizontal line is my annual value level of $966.02. The stock is between the upper two horizontal lines, which are my semiannual and monthly pivots of $1,101.14 and $1,142.47, respectively, and the upper level was tested on Thursday. Above the chart is my quarterly risky level of $1,229.05.

[Check out Chapter 2 of the Technical Analysis course on the Investopedia Academy to learn more about using moving averages to develop your trading strategy.]

The weekly chart for Alphabet

Weekly technical chart showing the performance of Alphabet Inc. (GOOGL) stockCourtesy of MetaStock Xenith

The weekly chart for Alphabet is positive, with the stock above its five-week modified moving average of $1,125.18. The 200-week simple moving average, or the "reversion to the mean," is at $800.35. This average was last tested during the week of Oct. 7, 2011, when the average was $249.87. The 12 x 3 x 3 weekly slow stochastic reading ended June at 75.93, up from 73.33 on June 22. A close below $1,125.18 today would downgrade this chart to negative.   

Given these charts and analysis, investors should buy Alphabet shares on weakness to my semiannual and annual value levels of $1,101.14 and $966.02, respectively, and reduce holdings on strength to my quarterly risky level of $1,229.05. (For more, see: 5 Global Bargains That Can Outperform.)

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