Facebook Inc (FB) is a social networking website company which is listed on the NASDAQ with a market capitalisation of around $225billion. Price last traded at $80.54. To learn more about the company, please visit its website at www.facebook.com
Let's analyse the technicals beginning with the monthly chart.
FB Monthly Chart
We can see price has been in an impressive bull market from its low in 2012 at $17.55 to its recent high at $86.07. That's a not-to-be-sneezed-at five bagger.
However, this bull trend is looking long in the tooth if the lower indicators are anything to go by.
The RSI shows a triple bearish divergence at the recent high.
The Stochastic indicator has just made a bearish crossover after putting in some bearish divergences.
The Momentum indicator shows momentum has fallen off a cliff over the past year. The game appears to be nearly up if it isn't already!
The PSAR indicator still has a bullish bias with the dots underneath price but this is looking shaky with price edging ever closer to this support.
Personally, I think the bull trend is done and a new bear trend is in its infancy. If I am wrong then I would think only marginally higher.
So, how low do I expect price to trade in this new bear trend?
I have drawn a horizontal line which denotes the previous swing high set on its first day of trading in May 2012 at $45. This level should provide support although I expect price to nudge a bit lower as it gives this support level a good test.
I have added Fibonacci retracement levels of the whole move up and the 61.8% level is just below the previous swing high so that is where I am targeting the final pullback low to occur. This level stands at $43.72. Price may nudge a touch lower as it attempts to fake out the technical analysts that follow that level so closely.
Also, I have drawn a Fibonacci Fan and the 76.4% angle looks set to be just under this area in mid 2016 and I expect this angle to provide solid support.
Let's move on to the weekly chart.
FB Weekly Chart
Once again, the lower indicators are looking very bearish with the RSI showing a quadruple bearish divergence at the recent high and the MACD indicator a quintuple bearish divergence no less.
I have drawn a Fibonacci Fan which shows price making its way through each angle as the bull trend progressed. Price has recently broken below the 61.8% angle and there is now a big drop to the next 76.4% angle.
I have drawn an uptrend line along bottoms which represent support and breaking down below there now would look very bearish in my opinion.
The PSAR indicator has a bearish bias with the dots above price and while price may go up to test that resistance I suspect it will hold and a big downtrend will follow. The dots currently stand at $84.90 and will be around $84.50 next week.
Let's wrap it up by looking in close at the daily chart.
FB Daily Chart
The lower indicators on the daily chart offer some relief to the bulls. The Stochastic and MACD indicators both appear to have a bit more upside left in them.
The PSAR indicator has a bullish bias and I expect some follow through to the upside from here.
The Bollinger Bands show price made it back up to the upper band. While it is possible for price to turn back down here and head to the lower band I think one last move that clings to the upper band is in store.
The horizontal line denotes a minor swing low and we can see price clipped that level on its recent run down. So that may well turn out to be the first lower low and will need to be confirmed by a lower high.
I have added Fibonacci retracement level of the recent move down and the first rally in a new bear market often makes a deep retracement. Therefore, I am targeting the 76.4% level at $83.88 to bring in the lower high. The 88.6% level at $85.01 is worth considering but may be a tad too high.
Summing up, I believe the bull trend is done and price is tracing out its first steps in a new bear market that will see around 50% lopped off the price before the next big bull trend commences.
Disclosure: I have no financial interest in FB.