In an October 2017 update for FANG stocks, I reviewed how I thought the FANG stocks still had bite. For Facebook specifically, I discussed its sideways price action over the previous couple of months. I made the following comment in the article:
FB's Bearish Tower candlestick pattern developed after reaching its Golden Ratio for its multi-year uptrend. The Bearish Tower candlestick pattern could be indicating a longer than normal consolidation period.
Facebook continued its streak of earnings beats with its most recent earnings report. This earnings beat also helped push FB's share price above the resistance area from the Bearish Tower candlestick pattern. Is it time to look at new overhead price targets? I think so. In the October article I also mentioned that
When a stock consolidates sideways, the next movement is typically a resumption of the previous trend.
It looks like the resumption of FB's previous trend is starting to shape-up.
This first chart for Facebook (FB) is a 5 year monthly candlestick chart to see how its long-term uptrend is progressing. After breaking through its Trading Channel that it spent approximately 3 years in, the trend for Facebook's share price has picked up momentum.
The Fibonacci Extension Tool on the above chart suggests a price objective of $209.36, which is the Golden Ratio for the current uptrend. The Golden Ratio is defined as the 1.618, which is also 161.8% in percentage terms. A Golden Ratio is a high-percentage target area for uptrends. The $209.36 price level appears to be a very high percentage target for FB's share price.
This long-term chart suggests purchasing any pullbacks to the $172 - $175 price levels during November or December. The $172 - $175 support area is identified by the green trendline from the past year.
The $209.36 price target is the medium-term price target for these holdings.
Time Frames - General
Remember, here is how I define short, medium and long-term time frames:
Short-term is a 1-3 month time frame
Medium-term is a 3-12 month time frame
Long-term is longer than 12 months
The $209.36 price target would be considered a medium-term price target for FB. The possibility of an "over-shoot" also exists IMO. The over-shoot target would be approximately $220.
FB - Moving Averages
Sometimes moving average lines can be used to identify opportunities to jump in on an uptrend. Let's see what the moving average lines suggest on this 1 year daily candlestick chart for Facebook.
During any strong uptrend, which Facebook is in, look for the 20 and 50 Day moving average lines to provide the "bulk" of the support during pullbacks.
Consider using the 20 Day and 50 Day moving average lines as areas to make scale-in purchases. At $174.05, the 50 Day moving average support falls right in the range from the support from the trendline on the 5 year chart above. Having 2 different types of analysis with the same support area provides additional support for a price level IMO.
FB - Point & Figure Price Objectives
Following are the Point & Figure price objectives for Facebook (FB).
High/Low Point & Figure Chart - $205 Bullish Price Objective
Closing Point & Figure Chart - $150 Bullish Price Objective (Met)
The High/Low Point & Figure $205 bullish price objective sure seems to confirm at least the move to the $209 area as calculated on the 5 year monthly candlestick chart.
Facebook (FB) Summary
While Facebook's share price has seen some periods of short-term consolidation over the last couple of months, stay long for the continued breakout towards the $220 price targets. Use any pullbacks in the short-term in order to play the medium-term upside price targets. The 20 and 50 Day moving averages looks like the best places to purchase shares to go long if you aren't already.
As FB's share price approaches the $209 - $220 price range, a short-term trading opportunity may occur. Selling shares as high above the $200 price level would be suggested and then look to repurchase those shares on a pullback back towards the $200 price range or a quick dip below it.
Remember though, the above trade strategy is a short-term trading opportunity. Facebook is still in a long-term uptrend and long-term uptrend can sometimes catch you out of position on an unexpected pullback. Keep trades very short-term in nature when looking for a pullback. Don't get caught out of position for the next leg upwards.
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