Facebook shares are on a tear, moving inside a solid rising channel on the daily time frame. However, it might be time for a pullback from the recent strong rally since price is already testing the resistance.
In addition, both RSI and stochastic are already indicating overbought conditions. These oscillators haven’t turned lower though, which suggests there may be a bit more upside momentum left to trigger a break above the current highs at $104.88/share.
The 100 SMA is safely above the 200 SMA, confirming that the long-term uptrend is likely to stay in play. Profit-taking activity at the end of the week and month could still spur a move back to the channel support at $90.50/share or at least until the $100/share psychological level.
Facebook Shares Outlook
The social media company is expanding its reach to emerging markets, with CEO and founder Mark Zuckerberg making a trip to India this week. Facebook plans to address the low internet connection speeds in these economies, as the platform is facing its strongest growth prospects there.
Analysts are also keeping a buy recommendation on Facebook shares, thanks to its strong fundamentals. TheStreet notes that revenue growth came in higher than the industry average of 10.2% and that the company’s equity to revenue ratio is very low, implying that there has been very successful management of debt levels.
With that, Facebook shares could be in for plenty of upside, pending any monetary policy action from the Fed. Signs that the central bank could increase borrowing costs later this year could pull US equities down, as this would weigh on business and consumer lending.
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