Facebook (NASDAQ 🙂 comes out after its release on Wednesday, January 29 for the closing of the fiscal quarter for December 2019. The expectation is earnings per share of $ 2.52 with sales of $ 20.88 billion, a increase compared to the corresponding quarter last year, when the company posted $ 2.38 earnings per share on $ 16.91 revenue.
Analysts expect strong revenue for the social network leader, despite regulatory oversight, since user activity has not only not been reduced – even after a series of serious privacy abuse scandals – but it is also in a revival. And where the users are, the advertisers go, regardless of other considerations.
That said, Facebook could very well end up in a crossfire from a panic-induced, wide market sale for fear that the deadly Chinese coronavirus could spread, affecting global growth, which in turn affects the social media giant would make a profit.
Interestingly, the technical map not only gives warning signals in the short term, as we would expect because of the current risk-off, but there is also a bearish signal in the long term.
On Friday, Facebook fell below its upward line since the low of December 13, after the RSI had done the same a week earlier (blue, vertical line).
The RSI scratches the overbought level of 77, the highest since April 25. That level preceded a 17% drop to the low of $ 161, the bottom of June, where it was supported by the 200 DMA.
Then, on June 11, when the RSI reached a much lower overbought level of 71, a less demanding correction, the price dropped around 15% to October 3. Now the price is around 9% above the upward line, the support interest of which is underlined by the 200 DMA tracing. This rush to support the $ 200 psychological, round number makes it a viable target.
However, the graphs also show a long-term bearish signal.
Facebook weekly card
The weekly RSI has caused a negative divergence. Although the share has risen sharply, to 1.145% since the IPO after the IPO of September 2012, the RSI indicates that the momentum is steadily decreasing.
If the RSI drops to its previous low of 48, which it published at the end of September 2019, it could suggest that the price will also revise the price of the same date: $ 171. However, the 48 RSI level If we don't hold on to it, we see the price fall to $ 123.52 on December 10, which will form a huge double top from July 2018.
Trading Strategies
Conservative traders would not act against the upward trend and wait for signs of $ 200 support for a long position.
Moderate traders can go short if at least one full candle falls below the upward line since the December 13 low, followed by a failed retest of the broken up line.
Aggressive traders can now fall short, provided they understand the risk of trading as opposed to the trend and have a trading strategy that they are committed to and that offer them an attractive risk-return ratio.
Trade sample
Input: $ 220 Stop-loss: $ 223 Risk: $ 3 Target: $ 211 Reward: $ 9 Risk: Reward ratio: 1: 3
