Market Outlook

Chart of the week – Facebook is holding above 200-day MA ahead of earnings

Chart of the week – Facebook

Facebook is holding above 200-day MA ahead of earnings

Medium-term technical analysis

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Source: CMC Markets

Time stamped: 24 Apr 2021 at 9:40 am SGT

  • Since its prior bullish breakout on 17 March from a 7-month “Symmetrical Triangle” range configuration from 26 August 2020 high of 304.65, the share price of Facebook has rallied to hit a fresh all-time of 315.82 on 8 April. Thereafter, it has declined by -6.3% to print an intraday low of 296.02 on 22 April ahead of its Q1 2021 earnings release on 28 April, Wednesday after the close of the US stock market.
  • Facebook has continued to evolve within an ascending channel in place since 18 March 2020 low of 137.12 and continues to hover above its rising 200-day moving average despite some recent whipsawed price action around the 200-day moving average on 3 March to 8 March as it tested the ascending channel support.
  • These observations suggest that the major uptrend phase of Facebook remains intact. Interestingly, the recent decline in price action from its current all-time high of 315.82 printed on 8 April to 22 April low of 296.02 has led the daily Relative Strength Index (RSI), a momentum indicator to slide from its overbought zone towards its significant ascending support at the 50% level and staged a rebound from it on last Friday, 23 April. Hence, it implies a potential revival of medium-term upside momentum that supports a further up move of price action.
  • If the 277.80 key medium-term pivotal support holds, Facebook may kick-start another round of potential impulsive up move to target the next resistance at 321.60 and above it sees 337.70/348.20 next (Fibonacci expansion cluster & potential exit target of the bullish “Symmetrical Triangle” range breakout).
  • However, a daily close below 277.80 invalidates the bullish tone for a deeper corrective decline towards the next support at 243.20 (the range bottom of 21 September 2020/14 January 2021).