Shares of social media giant Facebook Inc (NASDAQ:FB) have rallied firmly over the past couple of weeks along with the broader stock market, and as a result, FB stock has arrived at a well-defined line of resistance near its year-to-date highs. With earnings for Facebook out in late July, traders and active investors now have clearly defined support and resistance to focus around.
Specifically, Facebook is scheduled to report earnings on July 27 after the close of trade. Thus, any active investors that are looking out even a matter of weeks are better off waiting for the earnings report to pass before making their next move in FB stock.
It has been choppy going for Facebook over the past few months; however, looked at year-to-date, or over the past few years, FB still is one of the best trend following and growth stories out there. From that perspective the game plan in the stock remains the same; buy the dips and sell the rips.
FB Stock Charts
Looking at the multiyear chart of Facebook stock, note that the uptrending channel since mid-2013 is well defined by the purple parallels.
The red 200-day simple moving average has also acted as support all along. The 200-day SMA also matches up with the lower end of the uptrending channel, which makes for a well-defined area of technical support. Any weekly break/close below the $110 area would bring into jeopardy the multiyear uptrend.
On the upside, FB stock has over the past couple of years consistently found resistance at the upper resistance line. From this perspective, any move back into the high $120s would stretch the stock on the upside for the near- to medium-term. This likely would call for some consolidation.
On the daily chart, we see that FB stock has a good horizontal reference support area around the $109-$110 area, which I marked with the blue box. The last reaction low in FB stock in late June took place in this support area, which also lines up with the 200-day SMA.
Going into earnings, this will be my area of focus for crucial technical support to hold. Also, this is the same area of support I discussed on the above longer-term chart, but it also has great significance on the daily chart.
On the upside, the current diagonal resistance area around $118-$120 is my focus into and through earnings. If FB stock can push above this area with authority after earnings, I would get long the stock with a price target in the high $120s.
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