Strange Ranking Fluctuation - Some Predictions?
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My client is the green line currently on 3 & 4.
The pages that rank 3 & 4 are
3 -> home page targeted to main keyword
4 -> specific service page targeting same main keyword as home page (a bit of cannibalization)
The competitor targets other keyword as their main keyword. The 1 & 2 position is taken by him but with 2 different sites (2 sites -> 1 owner). They have a high pa & da but is from gaming websites and stuff while my client has targeted good links.
Any predictions... would the green go back again ?

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I am not understanding the 3 and 4. Might just want to add a "me" to your lines so I can make sure to give good advice.
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Dont really have any context as to the timeline of this, and the other lines in the graph. Just by looking at the green lines though, it looks like normal ranking fluctuations. 1-2 spots randomly here and there arent that big of a deal. Sometimes its actually a good sign. I have seen in the past that when the fluctuations start happening, Google is trying to find out where you will land in the mix again.
With some good link building, new and fresh content, you should be able to get back within a couple months. But you should do something.... if you dont change anything, dont expect Google to change anything either

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Sorry for the vague graph. Good answer.... We are actually working on improving the blog side and make our social media presence stronger.