Technical Analysis – Facebook stock cautiously bullish despite reversal off new all-time high


Anthony Charalambous, XM Investment Research Desk

Facebook stock has pivoted from the fresh all-time high of 222.55, dropping past the 218.44 level, which is the previous historic high from 25 July 2018. The falling Tenkan-sen line and the technical indicators back the correction from the peak, reflecting strengthening negative momentum.

The MACD in the positive zone has slipped below its red trigger line, while the RSI has extended its decline out of the overbought region towards its neutral mark. The Stochastics reflect a bearish bias with the %K line having claimed the 30 level. However, with the Kijun-sen line and all the SMAs sloping upwards, it seems that a revival of the climb may be on the cards, if the correction keeps above the 207.55 – 203.80 area.

If buying interest picks up, first to test the advance is the 218.44 resistance ahead of the recent top of 222.55. If buyers manage to conquer the record peak, the rally could stretch towards the 161.8% Fibonacci extension of the down leg from 207.55 to 173.00. Overcoming this, the 234.00 handle – which is the 176.4% Fibo extension – may bring the advance to a halt.

Otherwise, if sellers reemerge, initially the Kijun-sen line could interrupt the drop towards a key region from the 207.55 inside swing high to the 203.80 low, which also encapsulates the 50-day simple moving average (SMA). Clearing this important barrier, the bears may then encounter significant pressure within the Ichimoku cloud, from the 100-day SMA at 196.25, the trough of 193.10 and the 200-day SMA at 192.07 beneath.

In brief, the short-term bias is bullish if the stock price remains above the 203.80 support.