Facebook (NASDAQ:FB) traded lower yesterday, after hitting a record high of $375.25 on Friday, and hovering fractionally below that barrier on Monday as well. Overall, the stock continues to print higher highs and higher lows above the upside support line drawn from the low of Mar. 4, and thus, we will consider the outlook to be positive.
Today, after the closing bell, the giant releases its earnings results for Q2. The platform has been experiencing stellar earnings and revenue recently as the pandemic has prompted people to spend more time and money online. What’s more, the company is now investing heavily in virtual reality and augmented reality, technologies which could attract new users and boost growth. With that in mind, today, market participants may be watching for details about the new initiatives and also whether earnings per share will grow as strongly as analysts expect.
A strong report may encourage more buying of the firm’s stock, something that could result in a break above the record peak of 375.25. This will take the stock into uncharted territory, and with no prior peaks and inside swing lows to mark any potential resistance zones, we will mark as such a potential obstacle the psychological number of $400.00. That said, before the next leg north, we cannot rule out some further retreat, perhaps for the share price to test the $355.00 – $359.00 zone as a support.
Shifting attention to our short-term oscillators, we see that the RS has turned down and just exited its above-70 zone, while the MACD, although above both its zero and trigger lines, shows signs of topping as well. This suggests slowing upside speed, which adds more credence to the view that some further retreat may be in the works before investors decide to jump back into the action. Perhaps they could sell today, ahead of the earnings, and buy again tomorrow if the results are robust.
Now, in order to start examining the case of a short-term reversal to the downside, we would like to see a dip below the $328.00 zone, which provided support between June 10 and 21. Such a move could confirm the break below the aforementioned upside line and may initially see scope for declines towards the $317.00 area, which is marked by the inside swing high of May 14. If that area does not hold, market participants may allow the stock to slide towards the low of May 19, at $304.00, or the low of May 12, at $297.00.