Despite some major negative press in recent years, most recently an ugly metabolism with Apple (NASDAQ 🙂 over a change in the iPhone's privacy settings that could threaten Facebook's lucrative, targeted advertising activities, the social media giant generally seems unstoppable.
The Mammoth Communications Services Platform is scheduled to publish its results for the first quarter of 2021 on Wednesday, April 28, 2021, after the close. Analysts predict that Facebook (NASDAQ 🙂 will show EPS of $ 2.36 EPS on revenues of $ 23.53 billion. That's a significant improvement from earnings per share of $ 1.71 and $ 17.74 billion in the same period a year ago, but lower than when earnings per share were $ 3.88 and revenue was $ 28.07 billion.
The reflation trade is to blame. Investors left technology and other stocks, such as Facebook, which outperformed during the pandemic, and instead shifted to stocks that were neglected during lockdowns and are now delivering value because of their depressed prices.
Despite an ongoing antitrust threat, Facebook's digital ad revenues seem to have nowhere else to go, but higher. The stock's technical effects look equally promising, which could mean that traders will take FB shares to new all-time highs.
The stock has fallen slowly since April 8, its all-time high above $ 315. Note how steep the leg up prior to the record was – up from $ 37.58 within 9 sessions. Conversely, the decline so far was only $ 19.83 over a 12-day period, about half of the price movement over a time span that was 25% longer.
This shows that there is much more interest in the rise or fall of the shares. The preceding movement is known as a & # 39; flagpole & # 39; and the down-tilted range is the core of the & # 39; flag & # 39 ;. The pattern is considered a continuation pattern because the obvious upward bias shows that the only reason the stock is pulling back is because of taking profits from traders who enjoyed the flagpole rather than because of a consensus on a reversal.
In cases like this, new bulls picked up the shares unloaded by previous bulls. Once the profit taking is complete, the new bulls, who still want to make a profit, are expected to raise their bids above the flag. That will likely cause a short push, pushing the price up even further.
When all the shorts are covered, a temporary reduction in demand can bring the price down again, until traders will be satisfied with the lower price and stock up again, this time even higher. The early bulls that have already cashed in may then get angry about their premature exit and run back in. At the same time, many who sat on the sidelines will decide to join in the fun. In this way, most of the market ends up on the same side – that of demand.
Note that the flag found support towards the March peak, showing that demand is interested in this uptrend.
This is, of course, the assumed dynamics expected during this pattern, based on historical behavior. We don't have a time machine. We only weigh up the evidence and navigate through potential transactions. Here's how to do it:
Trading Strategies
Conservative traders should wait for the flag to complete with an upward breakout and a closing price of at least $ 305, and above the flag for a minimum of three days, preferably a weekend. They then have to wait for a return movement that reaffirms the flag's support before committing to a long position.
Moderate traders would go on a closing basis with an upward breakout of at least one long, full candle above the pattern before jumping in.
Aggressive traders could enter at will, if they understand the analysis and do not wait for upward confirmation of the higher risk, as the price is two steps ahead of the rest of the market. The more aggressive the approach, the tighter the trading plan should be.
Here's an example:
Trade Sample
Entry: $ 300
Stop Loss: $ 295
Risk: $ 5
Target: $ 330
Reward: $ 30
Risk: Reward Ratio: 1: 6
Author's Note: We don't know the future. We are not saying this will happen. What we're saying is that based on historical price behavior, the odds are in favor of the moves, as we described, that correspond to the different stages of confirmation. Even if we're right, you can still lose on the trade, if it catches your stop loss, which you should place based on your timing, budget, and temperament. Until you learn how to customize your own trading plans, follow ours, take small risks, learn, not make a profit, or you will end up with nothing.
