Facebook gapped lower on a poor earnings report two weeks ago. It's staggered there since as the rest of the market rebounded, and now the technicals may be pointing lower.
The first big pattern is a potential bearish flag following the January 30 drop. The direction of movement was lower, so a continuation pattern like a bear flag could point toward another leg down.
Next, the bearish flag has taken shape along the 50-day simple moving average (SMA). The key line tried to give some support but now that could be fading after two weeks of consolidation.
Third, FB's recent move above $220 could be viewed as a false breakout compared to the July 2018 peak. That creates potential for distribution (otherwise known as "selling") if recent buyers near the highs lose confidence.
The news has already been shifting in that direction because FB's performing the opposite of many other big technology firms like
AAPL
,
AMZN
and
MSFT
. They're all delivering in key growth areas (services, AWS, Azure). Even companies like
IBM
and
TWTR
are showing signs of a turnaround.
FB, on the other hand, is struggling to grow as regulatory pressures increase. A big downgrade from Pivotal Research yesterday also raised questions about ad revenue.
The current setup also has a potential level for risk management, with bears able to use the 50-day SMA as their pain threshold. To the downside, $200 could be the next line to watch.
The first big pattern is a potential bearish flag following the January 30 drop. The direction of movement was lower, so a continuation pattern like a bear flag could point toward another leg down.
Next, the bearish flag has taken shape along the 50-day simple moving average (SMA). The key line tried to give some support but now that could be fading after two weeks of consolidation.
Third, FB's recent move above $220 could be viewed as a false breakout compared to the July 2018 peak. That creates potential for distribution (otherwise known as "selling") if recent buyers near the highs lose confidence.
The news has already been shifting in that direction because FB's performing the opposite of many other big technology firms like
AAPL
,
AMZN
and
MSFT
. They're all delivering in key growth areas (services, AWS, Azure). Even companies like
IBM
and
TWTR
are showing signs of a turnaround. FB, on the other hand, is struggling to grow as regulatory pressures increase. A big downgrade from Pivotal Research yesterday also raised questions about ad revenue.
The current setup also has a potential level for risk management, with bears able to use the 50-day SMA as their pain threshold. To the downside, $200 could be the next line to watch.
