Thursday, May 9, 2013

Facebook's Elliott Wave structure

Here is a daily chart of Facebook, with ticker "FB" on the NYSE. Facebook has just completed a 4th wave correction and is in the beginning of a 5th wave rally. Target is USD 36, but it could go even higher.







































Click on the above image for larger picture.

The 4th wave low in blue color was made with a positive divergent %B. The money flow index is positive. The RSI is in a rising channel. Notice that the Bollinger Band width indicator is very low indicating low volatility. This is common before a big move is coming.

The rally from early September 2012 looks impulsive and the decline from the top in late January 2013 looks corrective, that is the reason we expect the next big move to be to the upside.

Risk management: Stop loss at USD 26.60 or alt. USD 25. If price enter the territory of wave "1" of USD 24,20 or less the bullish pattern is invalidated.

Alternate: An a,b and c correction was completed in late January 2013. This could then be part of a larger  structure like a x, and a new a,b and c corrective rally, before a further decline take place in Facebook.

Geir Solem

Elliott Wave Technician
Copyright (C) all rights reserved

4 comments:

  1. What are your thoughts on Facebook now? The correction seemed much deeper than anticipated. However, I think your count could be off. Perfect retracement to 23.26 of .382. I believe wave 3 is just starting and a powerful move upward will be in play. Cup and handle pattern is developing, similar to Ford and Radian Group. I see explosive move to 30+ soon.

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  2. Our main scenario is now that this was an a,b and c upward correction. The recent decline could be an "x" and a new a,b and c upward correction is in progress.

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  3. Your blue wave 4 enters the price territory of blue wave 1...generally an Elliott Wave no-no. Do yu have alternate count??

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  4. The current rally looks very impulsive with new highs.

    An alt. count could be that wave "1" up during the second half of 2012 was a leading diagonal, the correction during the first half of 2013 was wave "2" and the current rally wave "3".

    There is also the possibility that we are in a large ending diagonal structure. Then the internal count would be like "a", "b" and "c" rather than "1","2" and "3".

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