Facebook (NASDAQ:FB) traded higher yesterday, breaking above the resistance (now turned into support) barrier of 280.50, marked by the high of Dec. 29. Overall, the broader path appears to be to the sideways on the daily chart, but since Jan. 15, the stock has been in a recovery mode. Thus, with nothing pointing otherwise, we would see the case for the recover to continue for a while more.
Having said that though, a lot of the stock’s forthcoming direction may depend on the firm’s earnings report, scheduled to be released today, after the US closing bell. Despite the traffic surging due to the coronavirus pandemic keeping people at home, critics say that the company has failed to take necessary actions to stop hate speech and posts advocating political violence. Market participants may be on the lookout of how this may have affected earnings in Q4 2020, with analysts predicting that EPS will rise sharply, but at a slower pace than the previous quarters of 2020. Another metric to which investors may pay extra attention to is the monthly active users, a major driver for advertisement revenue.
Upbeat results may allow the stock to continue its recovery mode, perhaps initially targeting the high of Dec. 9, at around 288.00. If that zone fails to provide resistance, its break may carry larger bullish implications, perhaps paving the way towards the peak of Nov. 5, at around 297.50.
That said, our short-term oscillators suggest that a small retreat may be in the cards before the next leg north. The RSI has just exited its above-70 zone and continues to point down, while the MACD, although above both its zero and trigger lines, shows signs of topping as well.
Now, in order to totally abandon the bullish case, we would like to see a decent dip below 263.50. This will drive the share price below all three of our moving averages on the 4-hour chart and may initially open the path towards the 255.00 area, marked as a support by the inside swing high of Jan. 14. Another break, below 255.00, could set the stage for the low of that day, at around 244.60.