Facebook Shares Finding Support at SMA – Jan 7, 2015

Facebook Shares Finding Support at SMA - Jan 7, 2015

Facebook Shares Finding Support at SMA - Jan 7, 2015

Facebook shares could be due for another bounce, as price is finding support at the 50 simple moving average on the daily time frame. MACD is heading lower though, which means that sellers are in control for the time being.

Price action could hinge on the upcoming FOMC minutes release, which is a huge event risk for Facebook shares and other US equities today. Hawkish remarks could mean that the US central bank is moving closer to tightening monetary policy, which would mean tighter lending and more expensive business investment.

Facebook Shares Forecast

RSI is also moving south, which means that selling pressure is still present for Facebook shares. A break below the 50 SMA, which has served as a dynamic support zone in the past, could mean a short-term selloff for the stock.

For now, traders are doubting Facebook’s ability to make use of its recent acquisition of Oculus Rift’s virtual reality products. This has been weighing on the share price since last year and lack of progress could see shares much lower in the coming months.

On the other hand, a Fed commitment to keep rates low for much longer would support business prospects, as it could allow the recovery to carry on. This could see Facebook shares back up to its previous highs around $82/share.

A break below the simple moving average could push price down to the next support zone at the $73/share. A move lower could mean a test of the longer-term 200 simple moving average around $70/share.

Risk sentiment and commodity prices could also play a crucial role in determining Facebook stock price action. Falling oil prices have been supportive of consumer spending so far, allowing US equities to trend higher. However, risk aversion and weaker demand for higher-yielding assets could keep gains in check especially if the upcoming US NFP release comes in weak.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com