Facebook, Inc. (NASDAQ:FB) Rally up to $190
Facebook (NASDAQ:FB) is set to report third quarter earnings after the closing bell on Oct. 30. While most Facebook stock investors will be focused on the earnings report and daily active user numbers, there is a development in the weekly chart that caught my attention.
The pattern that is developing is a possible head and shoulders pattern. The pattern is a bearish one in the end, but where Facebook stock is in the pattern would mean a rally in the coming months.
A head and shoulders pattern starts with a temporary high that forms the left shoulder. The stock then dips to form the left side of the neckline. The stock bounces back and moves above the left shoulder to form the “head” of the pattern. A second dip to a similar level as the left side of the neckline forms the right side of the neck. That is where the chart on FB stock is at this point.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 153.52.
The projected lower bound is: 137.16.
The projected closing price is: 145.34.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 18.3216. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 11 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 30.53. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 32 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -194.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed down -8.350 at 146.040. Volume was 8% above average (neutral) and Bollinger Bands were 26% narrower than normal.
Open High Low Close Volume___
154.280 154.650 145.600 146.040 27,744,596
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 154.30 164.21 178.09
Volatility: 43 32 46
Volume: 21,653,870 24,045,466 27,922,444
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FACEBOOK INC A is currently 18.0% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of FB.O (mildly bearish). Our trend forecasting oscillators are currently bearish on FB.O and have had this outlook for the last 23 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
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