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Will Trump Derail Facebook Stock? A Look at the Charts

Facebook, Twitter and others are under pressure on concerns that President Trump will retaliate against the group. Here's a look at Facebook shares.

Facebook  (FB) - Get Facebook, Inc. Class A Report, Twitter  (TWTR) - Get Twitter, Inc. Report and other social media stocks were down on Thursday as political tension heated up.

After Twitter assigned a fact-check note on one of President Trump’s tweets regarding mail-in voting, the White House began to move. Trump blasted social media platforms, alleging that they censor conservative views.

Further, reports now say he will sign an executive order, with many wondering what implications that may have for the group.

While this creates obvious risks for the stocks, there are doubts about the type of impact they will feel, if any at all. That seems to be the reaction in the stock prices too.

For instance, Facebook opened lowered by more than 2%, but by midday shares were already back in positive territory. Twitter fell more than 5% in early trading, but has since recouped about half of those losses.

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Trading Facebook

Daily chart of Facebook stock.

Daily chart of Facebook stock.

Look at where the morning dip sent Facebook stock. Shares dropped right into a key area, marked by prior resistance from January, as well as the 10-day moving average. Beyond that, this was the gap-up level from last week, as well as near the prior day’s low.

All of these levels combined for a perfect buy-the-dip opportunity. But that was only a great day-trading opportunity — it doesn’t mean it can sustain the move.

What we want to see now is a rotation over Wednesday’s high at $230.56. A close above that mark can put a further move higher back in play, perhaps beyond $235.

If Facebook stock can clear $235, it puts a test of the all-time high in play near $241.

The downside is just as critical as the upside, because bulls now have a very clear idea of where support lies. Should shares break below the two-day low at $221.13, the stock will be showing clear signs of waning momentum.

Below that mark also puts Facebook stock below the 10-day moving average. It will open the door to $215 and the 20-day moving average. Should we get sustained selling pressure in the name, a revisit of the $200 level may be in store.