Facebook Crushed Earnings
Overall Facebook is a strong company with great numbers. Including 59% YoY revenue growth, 16 quarters beating earnings estimates, and 2 billion searches per day.
Below is a simple chart of Facebook, 2 days after they crushed earnings. Shown is a 6 month, daily chart using Japanese candlesticks, one of my favorite. Japanese candlesticks can tell a lot when used with other indicators.
Observe the static cycle notated with cycle highs. If Facebook responds to this cycle, it should run into resistance right now using time. I have drawn 4 trendlines on the chart as well, 2 acting as support and 2 acting as resistance. The current one is acting as support.
At the bottom of the chart is a common oscillator currently suggesting momentum is slowing with a bearish divergence.
To sum up, we have a common cycle, trendline support with resistance above, and divergence showing up. This is the trade set-up. 2 ways you can play this, short now with a stop above the current high, or wait for a break of the trendline. Everyone has their own style but make sure you have an exit strategy in case the stock moves in the wrong direction.
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