Facebook Inc. (NASDAQ: FB) traded higher on Thursday, but hit resistance at 272.00 and then, it pulled back somewhat. Overall, the stock seems to be trading within a descending triangle pattern since November 5th, which, according to TA rules, is considered a bearish pattern. That said, until the stock exits the triangle, we prefer to stand to the sidelines.
In order to start examining the bearish case, we would like to see a clear dip below the lower end of the triangle, which is at 264.00. Such a move may initially pave the way towards the low of November 2nd, near 257.00, the break of which may carry larger declines, perhaps towards the 245.50 zone, defined as a support by the low of September 24th.
Looking at our short-term oscillators, we see that the RSI rebounded from near its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators suggest that that the downside momentum is diminishing, which means that the stock may continue to trade within the triangle for a while more. This supports our choice to stay neutral for now.
On the upside, we would like to see a break above the upper end of the triangle and the 280.50 barrier, marked by the high of December 29th, before we consider the case of larger advances. This may allow investors to target the 288.00 zone, which is near the peaks of December 7th and 9th, the break of which may open the path towards the peak of November 5th, at 297.50.
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