After slowly grinding higher in a tight consolidation pattern for the past few weeks, Facebook shares made a downside break to a key support zone. Price is moving close to the 50 simple moving average, which has held as a dynamic support level on a pullback earlier in the year.
MACD is reflecting a return in selling pressure, as the indicator is showing signs of moving south. This could take Facebook shares to the $72.00/share level, which might continue to hold as near-term support. RSI is also confirming a return of downside momentum, as the oscillator is moving below the 50 mark.
Facebook Shares Forecast
The short-term 50 SMA is moving above the longer-term 200 SMA, which indicates that the uptrend is still intact. If Facebook shares are able to bounce off the 50 SMA, price could test the previous highs near the $78.00/share level or perhaps go for new ones. The next psychological resistance level is at the $80.00/share area.
A break below the 50 SMA could be a sign that a reversal is in the cards for Facebook shares. The next support level is at the $68.00/share level, which is an area of interest, then at the 200 SMA or around $64.00/share.
Much could depend on the upcoming FOMC statement and how it could affect US equities this week. Recall that several US stock indices and company shares hit record highs after Fed Chairperson Yellen showed openness to earlier rate hikes if labor market progress continues in a more rapid pace. Apart from that, strong data from the US released recently supported the upbeat forecasts for Facebook shares as it suggested the end of easy monetary policy and the start of interest rate hikes for the Fed.
Further acquisitions by the social media company and increased ventures in the mobile industry could continue to keep Facebook stock supported in the near term.
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