Three weeks ago, I showed and explained by using the Elliott Wave Principle that Facebook (NASDAQ:FB) share price, regardless of all the bad news, moves in predictable ways.
I concluded:
“The current scandal is a good reason for FB’s stock price to drop to the ideal 4th wave target zone between $238-294 before rallying to new all-time highs one last time.”
Thus, once again, irregardless of its slightly better-than-expected earnings release yesterday, Facebook is moving lower towards where it wants to go. Please remember: the market always knows where it was, is and will be. The EWP can help determine that path very well.
Figure 1: FB monthly candlestick chart with EWP count and technical indicators:
Fast forward, and Facebook is now trading at $313, a 6.3% decline since my previous post. So far so good. Thus, Facebook’s share price counts still best as being in (blue) wave Primary-IV of (pink) wave Cycle-1. See Figure 1 above. The ideal target zone remains $294-238. Or, put simpler $265+/-30. And as said three weeks ago:
“Once (pink) Cycle wave-1 tops, FB’s shares should be in a multi-year decline back to at least the 2018 lows ($120s), possibly even lower.”
Bottom line: Three week’s ago my EWP count suggested Facebook was in a correction to ideally around $265+/-30 before it moved to new all-time highs again. The additional 6% price drop since has only added weight to my thesis. Price will have to drop below $190 to suggest a much larger top is already in place. But as said before, the charts do not support this notion at this stage. Once the target zone is reached it could be a great buying opportunity for a multi-month rally, with an appropriate stop in place.