On Thursday evening, Benzinga asked its followers on Twitter what they’re buying at the open on Friday. From the replies Benzinga selected one ticker for technical analysis.
@RichardJudge17 and @dream_shinezuun are buying Meta Platforms, Inc (NASDAQ:FB) and @ger2619 asked, “will it go under 200?”
Meta’s fall from its Sept. 1 all-time high of $384.33 accelerated on Feb. 3, when the stock gapped down over 24% following a bearish reaction to the company’s mixed fourth-quarter earnings report. Since that date, Meta has continued to trade lower, suffering through a number of bearish headlines.
On Wednesday, Alphabet, Inc (NASDAQ:GOOG), (NASDAQ:GOOGL) announced plans to introduce new privacy restrictions across its Android smartphones, which will help to curtail companies that use software to track consumer behavior. Apple, Inc (NASDAQ:AAPL) made similar privacy changes last June, which made Meta’s advertising less effective and contributed to a wipeout of over $300 billion from Meta’s market value.
On Tuesday, Texas Attorney General Ken Paxton filed a lawsuit against Meta for its use of facial-recognition technology, which violates the state’s privacy protections. Paxton says Meta has violated the law tens of millions of times in the state and is seeking a $25,000 civil penalty for each violation of the Use of Biometric Identifier Act and $10,000 for each violation of the Texas Deceptive Trade Practices Consumer Protection Act.
The onslaught of bad news has forced Meta to lose another 5% of its value just this week alone but there are signs the stock is likely to bounce, at least, over the coming days and bullish traders can watch for signs of a reversal as it approaches the key $200 level.
See Also: Kevin O'Leary Is Calling The Bottom In Meta Platforms Stock: 'This Is Where You Want To Accumulate'
The Meta Chart: Meta is trading in a confirmed downtrend making a consistent series of lower highs and higher lows. The stock’s most recent lower high was created on Feb. 10 at the $235 level and the most recent lower low was formed on Feb. 8 at $216.15. Meta has since fallen below that level but has not yet confirmed the next lower low has been printed.
Meta is trading lower within a falling channel pattern on the daily chart, between two descending parallel trendlines. The pattern is considered bearish until the stock breaks up from the upper descending trendline on higher-than-average volume. If that happens, it's a powerful reversal signal that a larger move to the upside may in the cards.
The stock is due for at least a bounce because its relative strength index (RSI) has been hovering between about 21% and 28% since Feb. 3. When a stock’s RSI reaches or falls below the 30% level, it becomes oversold, which can be a buy signal for technical traders.
Meta is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
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- Bulls want to see Meta print a reversal candle such as a doji or hammer candlestick above the important $200 level and then for the stock to reverse course to the upside and break bullish up through the falling channel, which could help Meta to regain the eight-day EMA. The stock has resistance above at $216.15 and $230.31.
- Bears want to see big bearish volume continue to push Meta lower within the channel until the stock loses support at the psychologically important support zone at $200. Below the level, the stock has support at $190.14 and $181.50.
