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Fan Yang

I Think Facebook (FB) Will See Pain Below $150

We are in a period of consolidation in the equities market. Meanwhile Facebook $FB is in a unique period of correction that it hasn't seen since its IPO.

I think we are witnessing the first crack at this social media giant, but I would not be confident of a short just yet. Still, I think it is in a period of consolidation/correction that could take price below it's current 2018 low around $150. At least, we should anticipate a test of $150. 

FB Daily Chart

(click to enlarge)

Topping:
- The daily chart shows Facebook after a topping pattern that developed at the turn of the year. 
- Since then, price fell below the 200-, 100-, and 50-day simple moving averages (SMAs) and the RSI dipped below 30 in March.
- Now, the fact that price held under the SMAs and the RSI under 60 is indicative of a bearish outlook.
- In this bearish scenario, I would at least anticipate another test of the $150 area.
- I think it will get choppy and still has a chance to rebound back towards $170.
- But if $150 is cracked, the rising trendline there will also likely be cracked, and there would be downside risk towards the $135 area, around a lower rising trendline.
- The weekly chart also shows the bearish outlook, The RSI is still holding above 40, which is a bullish sign, but there is a chance that it will fall below 40, in which case it would be considered NON-bullish (a late signal, but still a strong confirmation).
- Now, we can see that as price approaches $135, it will test a previous resistance pivot as support as well as a rising trendline. 
- Meanwhile, the weekly RSI would likely tag 30 by the time price tags $135. This would signal oversold condition, which might be reliable since the overall long-term trend is still bullish.

Facebook Weekly Chart

(click to enlarge)

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