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
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