Is Facebook Ready To Drift South?

Google Class C Stock Tests An Upside Line

Facebook (NASDAQ:) traded lower on Wednesday, after it hit resistance on Monday near the prior upside support line drawn from the low of Mar. 18. Although the price is back above all three of our moving averages on the daily chart, the fact that it retreated after hitting that prior upside line suggests that more declines may be in the works.

However, in order to get confident on that front, we would like to see a decisive dip below the 268.00 zone, which is marked as a support by the inside swing high of Oct. 1. In case this happens, we may see FB sliding towards the 247.00 zone, which provided decent support between Sept. 21 and 25, and also acted as a resistance between July 7 and 21.

The price could temporarily rebound from there, but if it’s unable to climb back above the pre-mentioned upside line, we may see another drop, perhaps below 247.00 this time. This is when the price may slide to 227.00, which is the low of July 24.

Shifting attention to our daily oscillators, we see that the RSI, although above 50, has turned down, but the MACD remains above both its zero and trigger lines. Both indicators still point to upside momentum, albeit a slowing one, and that’s why we prefer to wait for a dip below 268.00 before we start examining the downside scenario.

On the upside, a break above 291.00 is the move that could brighten the stock’s outlook. The share would already be above the aforementioned upside line, with investors perhaps aiming for the record peak of 304.75, hit on Aug. 26. If that level does not hold this time around, then investors will have to deal with levels not seen before and establish new resistance zones.

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