Facebook shares have once again bounced off support at the long-term moving average on the 4-hour chart, confirming that the uptrend is still intact. In addition, price is trading inside an ascending trend channel, which means that there is more upside for the stock.
Stochastic is also moving higher, indicating that buyers are still in control of price action and could continue to push for more gains. The next resistance is located at the previous highs at $85/share or at the top of the channel closer to $88/share.
Facebook Shares Forecast
Even though sentiment for the US economy has soured in the past weeks, the outlook for Facebook shares remains positive. News that a fugitive claiming to own 50% of Facebook has pushed prices around but this issue has already been resolved, as the court ruled that the man forged the documents.
In addition, company announcements saying that the Facebook feed could be revamped to a friendlier version boosted share prices early in the week. On Tuesday, Facebook said that it will increase the amount of content coming from close friends on the news feed. “As more people and pages are sharing more content,” product manager Max Eulenstein and user experience researcher Lauren Scissors detailed in a statement, “we need to keep improving News Feed to get this balance right.”
However, should sentiment for the US economy worsen, demand for equities could take a hit and drag Facebook shares lower once more. Support at the $80/share level or longer-term EMA could be breached and lead to a move towards the next floor near $78/share or lower.
For now though, the path of least resistance is to the upside since there are no top-tier reports from the US economy that might have a significant impact on the outlook for US companies.
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