Shares of social media giant Facebook Inc (NASDAQ:FB) bumped higher Tuesday on the back of another analyst upgrade and positive comments from another analyst.
FB stock has performed well in 2015, as this low-interest rate, yield-starved environment is perfect for one of the few major believable growth stories out there. But more importantly to traders, Facebook shares currently are trading in a technically sound bull flag pattern that could soon resolve to the upside.
That’s something you can take advantage of.
On Tuesday, Piper Jaffray analyst Gene Munster reiterated his bullish view on FB stock and his price target of $146. He is positive on Facebook’s virtual reality ventures, saying that the company is making a big push in this direction, and that he expects the Oculus Rift virtual reality headset to be available in the first half of 2016. In July 2014, Facebook acquired virtual reality startup Oculus VR for $2 billion.
Separately, MKM Partners maintained a “buy” rating on Facebook shares but upped its price target on the stock from $105 to $120.
FB Stock Charts
Looking at FB stock through a multiyear lens that stretches back to its initial public offering ]in May 2012, we see that after a sharp rally into March 2014, Facebook corrected a little and as of the summer began to settle into a longer-lasting consolidation period.
The consolidation phase from this perspective was choppy but nonetheless trended marginally higher. In June of this year, a breakout ultimately occurred, and after a few weeks of rallying, FB stock began to consolidate those gains. From this perspective, both the trend and the momentum remain higher, and the positive tone of the news flow seems to support this.
On the daily chart, we see that for Facebook stock, the 21-day simple moving average (orange line) has been a good line of reference. When FB trades above this line, it tends to have momentum at its back.
On Aug. 10, the stock once again dipped below this moving average, and it has been struggling to get above it ever since. On Tuesday, Facebook shares climbed back above the moving average but failed to hold above for a daily close. Nevertheless, the price action since the July top now has the stock trading in a bullish flag or wedge pattern — the exact naming of the pattern is not as important as recognizing that the consolidation pattern is bullish in nature.
A daily close above the 21-day MA and above the $95.80 area could accelerate the upside for active investors and traders to play FB stock higher. The $102.50 area is your next upside target.
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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.
