Will Facebook shares recover from the sell-off?
Facebook (FB) published its financial report for the past quarter after trading on Monday, and on Tuesday, its shares fell by 5%. The profit of the social media market giant exceeded expectations, but the revenue and the increase in the number of users fell short of the forecast.
Facebook has also sparked another scandal around the company related to Facebook’s policies, which has already been called Facebook Papers. The company’s internal documents were based, which Frances Haugen handed over to the US Securities and Exchange Commission.
The package of documents includes “presentations, research, discussions and strategic memoranda,” illustrating how Facebook’s management is “looking for compromises between public safety and its profit.” Facebook has already become the center of scandals, including privacy issues, hate speech, and propaganda promotion.
The company’s reputation has suffered, and Congressional investigations have repeatedly against it. But now, the company is facing all the real risks at once.
The shares fell out of the ascending channel, originating at the lows of March 2020. Please note that the upper border of the track provided support to the securities during the 2018/early 2019 rally, and only in August 2019 did it turn into resistance.
The MACD and RSI indicators have formed sell signals. Currently, the 50-week moving average supports prices, but a more detailed analysis reveals new, mostly gloomy details.
When looking at the daily chart, it becomes evident that a “bearish” flag preceded the recent sell-off. Pay attention to the drop in volume as prices rise within this figure, demonstrating the lack of support for a real rally; simultaneously, the book returned on a downward breakdown.
After the price met resistance from the lower boundary of the ascending channel, it fell below the 50-period DMA for the first time since March (although not for long). Price has remained above the 200-period DMA since the May crackdown as a rebound from the March 2020 lows.
Has the market participants’ attitude to Facebook deteriorated enough to collapse the stock below the 200-day MA? Trading strategies Conservative traders should wait for a pullback that confirms the model’s integrity and only then open short positions.
Moderate traders will also wait for a corrective rally to minimize the stop loss. Finally, aggressive traders can sell now, taking on the additional risk of getting ahead of other market participants.
