After a precipitous drop from around $72 in March to the $60 range in recent days, traders wondered if they should unfriend Facebook (FB). But recent rumors that the social media stock will add new capabilities to rival Snapchat have renewed interest in FB stock. Does the technical analysis support a continued move up or will the bullish camp snap out of it?
Starting May 19, Profit Scanner powered by Recognia identified that Facebook put in a series of short- and intermediate-term bullish signals including the following:
- May 23: FB’s price crossed the 21-week moving average.
- May 23: FB’s price crossed the 50-day moving average.
- May 21: A Bullish Continuation Wedge pattern appeared on Facebook’s chart.
- May 21: A bullish Bottom Triangle pattern appeared on Facebook’s chart.
- May 19: A bullish Diamond Bottom pattern appeared on Facebook’s chart.
The most recent intermediate-term classic pattern, the Bullish Continuation Wedge, carries an upside target for Facebook stock of $74.00 to $77.00, which is expected to resolve in 49 trading days.
Resistance for Facebook stock resides at $67.33, so traders with long positions may look to take partial profits at that level if the stock appears to sputter.
It’s always prudent to start with a stop-loss in mind before initiating any positions, and Profit Scanner has pegged a closed below $58.34 as a tight stop based on the technical.
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