After its steady uptrend since May this year, Facebook shares are showing signs of a potential reversal after breaking below short-term consolidation. Stock prices failed to break past the $80/share resistance area and dropped below the 50 simple moving average on its daily time frame.
MACD is supporting this downward move, as the indicator is reflecting a pickup in selling momentum. After all, risk is off in the financial markets as the Ebola crisis worsened and geopolitical risk is present. This could lead to more losses for US equities, including Facebook shares.
RSI is also reflecting an increase in selling pressure, as the technical indicator is moving towards the oversold area. A turn from this region, however, could be a sign that Facebook shares are ready to move back up.
Facebook Shares Forecast
Further declines for Facebook shares could take the price down to the $70/share support zone or perhaps until the longer-term 200 SMA, which could act as a dynamic support area for price action.
On the other hand, a return in buying pressure or a pickup in risk appetite could renew demand for equities and boost the price back to the previous highs near the $78/share level. Profit-taking has also weighed on share prices recently, as company insiders posted $80 million in stock sales after the price reached record highs recently.
A continuation of the bull market could lead to another round of buying for Facebook shares, as the company remains strongly valued and is facing positive prospects. This could lead to a break past the $80/share level, perhaps all the way up to the $100/share area before the end of the year.
Bear in mind though that Facebook CEO Mark Zuckerberg announced that they have no plans to monetize their recent acquisition of WhatsApp, causing a sharp selloff for the company stock.
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