Facebook (NASDAQ 🙂 fell 1.7% yesterday after a Wall Street Journal report said CEO Mark Zuckerberg may have known about his company's controversial privacy practices. The social media giant is now concerned that the emails linking Zuckerberg to the scandal may be used against the company during a recently announced Federal Trade Commission (FTC) probe
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In the meantime, COO Sheryl Sandberg has sold 330,000 shares since the end of March, for only an average of $ 164.34 per share. It's not a good sign when one of a company's senior employees sells shares, and the timing raises questions about whether this insider believes their value is about to fall.
But this is not necessarily the worst of Facebook's problems. The FTC is preparing an antitrust case against the company while leaving the biggest technical companies in the cold to see if they are engaged in anti-competitive practices.
Goldman Sachs has warned investors that antitrust lawsuits can be a selling signal. Technical analysis matches.
Facebook Daily Chart
The share price of the social media giant could develop an H&S bottom that confirmed a coincidence of resistance points: the $ 180 level after the price had fallen due to the downward trend since the peak of late April
The downward trend line can also be considered as the top of a symmetrical triangle, the negative breakthrough of which shows that supply has suppressed demand. The triangle also forms the head of a complex H&S summit.
Yesterday's fall may be a right shoulder. The significance of the neckline is underlined with the 200 DMA, which reinforces its support / resistance function, by setting the $ 160 price as a springboard for a violent movement.
Trade Strategies
Conservative traders must wait for a negative neckline breakout, with a value of less than $ 158, to include a 3% penetration to filter out a bear trap. They would also do well to wait to see that the price stays below the neck for at least three days, preferably including a weekend. Then it would be advisable to wait for the likely return movement to retest the integrity of the pattern, with at least one long red candle enveloping a green or a small candle of either color.
Moderate traders can be satisfied with a 2% neck penetration below $ 159 and wait to see the price stay below the neck for at least two days.
Aggressive traders can now short the stock based on the downward trend line and the confirmation of the symmetrical triangle with the drop of yesterday.
Trade sample
Listing: $ 175
Stop loss: $ 180
Risk: $ 5
Target: $ 160
Reward: $ 15
Risk-Reward Ratio: 1: 3
