Market Climate:
Neutral. Hold. Going-Long.
Industry:
Internet Services
Indicators:
None
Patterns Identified:
Rising Channel
Broadening Wedge
Facebook stock price has for the better of eight years remained trading within a highly respected bullish rising channel. Similar to other major securities or blue chips currently on the S&P 500 or the Dow Jones, Facebook has recently broken beyond major resistance signifying a continued confidence in the integrity of both the security and of overall US economic health. During this breakout, volatility has significantly increased both abroad and domestically. This can be seen by the developing broadening wedge synonymous to the expansion of market volatility.
Canary Jones analysts have identified the broadening wedge of Facebook as a potential consolidating structure. Although the price has re-trended back into the original rising channel, the price has also exited and entered on other occasions. Yet, the stock continues to respect the prevailing macro trend.
Although Facebook user activity has remained a challenge for the company to retain high usage and greater amounts of screen time, Facebook has directly taken actions to prevent its consumers from spending exorbitant amounts of time on its platform. This has slightly made Facebook a less attractive advertising alternative to other existing platforms such as Google ads, YouTube, and even now Amazon.com.
Facebook’s continuing dominance of online social media has also for the most part created a negative consumer consensus that directly impacts their willingness to continue use for prolonged periods of time. Additionally, a string of data breaches and questionable ethical activities has simultaneously disrupted consumer image of the company and its brands.
Facebook’s stock price is currently trending between both the consolidating wedge, and the macro rising channel. This crossover has lead Facebook bulls to being indecisive of both direction and reasonable entry. Facebook bulls should consider entry on the supports of either the rising channel, or the broadening wedge so long as confirmation of candlesticks is also evident.