So you have owned some shares of FB for a while and you don't know what to do because "the market is falling apart" (at least that is what some people are saying). Let me calm your nerves just a tad. If you bought FB shares anytime before June of 2015 you are still making money on those shares. Granted, you are not making as much as you were in November of 2015 but you are still ahead.
Investments go up & down. No one seems to complain when investments are going up. But we all agree they can't go straight up for ever. If we could just find a way to tell when a stock stops going up it would be very helpful. This chart of FB is trying to tell you exactly that. And in time, It will tell you weather FB is going to continue going up or if it is going to stop going up.
Notice the green uptrend line labeled UT 1. That line starts back in August of 2013 . It touches the bottom of May and June of 2015 and now has touched the bottom of the candle that represents January of 2016. Is this a bad thing? I don't think so. In fact, if you bought FB when the May and June of 2015 candles touched the line you are still making good money on your investment.
I will take the opportunity now to remind you that the January of 2016 candle is not a complete candle. It will change for two more weeks. But at this point in time, I would say that if you bought FB stock when the price was close to the green uptrend line you are doing just fine. And you will continue to be fine ( making money ) as long as this candle and future candles stay above the green uptrend line.
Let's talk about the red downtrend line for a moment. It is labeled DT for short and shows you that November of 2015 is when FB reached its highest prices. December was a month with lower high prices for the stock and January has had even lower high prices. Typically, lower high prices are the part of the stock market roller coaster that makes the 401K investor squeamish.
If you extend the green uptrend line and the red downtrend line you will notice that eventually they will meet. Sometime before they meet, you will probably notice the candles trending above the red downtrend line or below the green uptrend line. That is when the chart is trying to have a conversation with you. If the candles trend up through the red downtrend line, FB is probably moving higher and could make new highs. If the candles trend down through the green uptrend line, FB is probably moving lower. How far? That is like asking your paper boy to deliver tomorrow's paper today...
Need help with on other stocks you own? Write a comment and ask me for help. I would be happy to create a chart for you.