FB Facebook Daily Chart Cup and Handle (C&H) Pattern
Here is a look at FB's C&H in progress. Price is creating a falling wedge vibe but note the RSI slipping away to the downside, and the MACD line is shaky. There is also downside momo shown by the short red bars. The gap fill at 24.80-ish is a logical target. The money flow stochastics and histogram are very constructive and positively diverged so they want to see price flatten and move higher. This mix of indicators hints at sideways movement going forward and promotes the idea that the handle should finish forming in the month or two ahead. The base for the C&H is 18, breakout line at 32.5, a difference of 14.5, so the upside target is 46 if the 32.5 is taken out. FB has traded a few months and a 200-day MA is starting to print; watch this critical support at 25.44; if that fails the gap fill is next at 24.80.
The light blue inverted H&S forecasted the up move to the 30-31 area which was achieved. The 20-day MA under the 50-day MA is another negative for FB. Projection is for flat action and a gap fill at 25-ish, sideways then up to finish the handle over the next couple months. The chart will need reassessed at that time but the projection now is sideways action for the springtime with buoyancy appearing as the summer sun begins, then potential upside breakout at 32.5. 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.
KS, I really enjoy your equity picks and comments!
ReplyDeletePer your 80/20 rule, would it be reasonable to expect FB falls to $22, since $28 has been violated?
Thanks,
TW
Nope, use it in the other direction, if 32 fails it would typically lead to 28. Price may leak lower towards 22, if so 22 would lead back down to a retest of the bottom at 18. Inthis near-term watch to see if the 200-day MA holds, or not, that is your first clue, then watch the gap. It appears the gap will hold. Others have commented on the H&S over the last few months which must be respected but having an H&S so quickly off the bottom, one of that size, does not carry clout, but, it must be considered nonetheless.
DeleteThen on the way up, the 28 should lead to 32, and/or 28.80 would lead to 29.20, 29.80 would lead to 30.20, and so forth.
DeleteKS, thanks for sharing. You make trading easy. I am still long since $27, and will add in the $25 area. Note that also the 150 day SMA has formed, which is currently at $24.64, and could be a logical target if the 200d sma fails, and it be enough for the the $24.80 gapfil!
ReplyDelete