Upside Break and Momentum on Facebook Shares – Nov 27, 2014

Upside Break and Momentum on Facebook Shares - Nov 27, 2014

Upside Break and Momentum on Facebook Shares - Nov 27, 2014

Facebook shares finally showed more movement, after close to a month of consolidation around the $74/share area. Price broke to the upside and rallied past the 50 simple moving average, hinting at further gains.

MACD is also suggesting that the upside momentum could pick up, as the oscillator is moving out of the oversold area. If so, Facebook shares could move up to the previous highs around the $80/share level before it gapped down back in October.

Facebook Shares Forecast

A near-term resistance level might also hold around $77/share and lead to the formation of a head and shoulders pattern. This is a classic reversal signal and might send Facebook shares much lower to the 200 simple moving average, which has held as a dynamic support area.

Further gains past $80/share, however, would indicate that buying pressure has picked up for Facebook shares. Bear in mind though that a top Facebook exec recently sold all his Facebook shares and raked in $1.5 million in the process. This follows a line of Facebook executives recently liquidating all their holdings as well.

News that the company is expecting a 55%-75% increase in expenses next year was enough to convince some investors to sell their existing stock, as profits might take a hit. Stockholders are also unsure if the company’s recent investments, which include the acquisition of WhatsApp, will soon pay off.

Facebook has also recently acquired Instagram and virtual reality company Oculus. The company is already showing signs of rolling out location-based mobile ads, which could be a strong revenue source. However, should these fail to get monetized, company stock could fall to the $74/share level or lower.

A drop below $74/share could push Facebook shares down to the next support area at $68/share, which is a tad below the 200 SMA. Further declines below this could eventually lead to a test of $65/share support.

To contact the reporter of the story: Jonathan Millet at