Thursday, July 16, 2015

FB Facebook Weekly Chart Rising Wedge

Facebook remains of interest to many. The chart was lat posted at the start of the year with the red arrow indicating a spank down ahead due to negative divergence, the rising wedge pattern and coming off the overbot conditions. Price falls from 85-ish to 75-ish but when the central bankers saved the markets in February, Facebook was a big beneficiary. Price is moving higher inside the green channel. It is interesting since the chart was very bearish to begin the year.

Over the last few weeks the short green lines show long and strong strength so one to three more weeks of buoyant prices at current levels are expected. The monthly chart is content at one to three more months of flat to slightly higher action but as the maroon lines show in the chart above, negative divergence will likely remain firmly in place over the couple-year time frame.

The projection is for FB to stumble sideways at current levels with a new high in price coming about two weeks out, then a pull back for a few weeks then a move higher again to current levels which would be the top for FB. Then more sustainable downside should begin for the months and longer ahead the move that should have continued after the start of the year. Facebook should place a multi-month or even multi-year top now through October followed by sideways to sideways down. The collapses from rising wedges can be quite dramatic so FB may end the year very ugly. FB is not an attractive long due to limited upside and also is not an attractive short since, as explained, it likely needs a few more weeks before topping out. The recent strength has created some momo. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Sunday, 7/19/15: FB gaps higher after the NFLX and GOOGL orgy of positive earnings. FB jumps +4.5% on Friday to 95 the upside move is a surprise. Price jumps above the upper trend line of the rising wedge. Traders are chasing the small number of stocks such as Apple, Facebook, Netflix and Google which pumps the Nasdaq Indexes and broader market indexes higher. Same analysis holds. The weekly chart indicators remain long and strong so higher highs in price expected a couple weeks out. Monthly chart indicators point to a higher high after any pull back on the monthly basis. The momentum is strong so the longer term top in FB is most likely in the August-November time frame.

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