Is Facebook Out of Gas? Here’s What the Chart Says

Facebook stock is gapping higher on better-than-expected earnings but is also struggling to push higher. Here's what the charts say now for FB stock.
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Facebook  (FB) - Get Report stock had a big day before its earnings report, rallying 6.2% on Wednesday. Then, after the close, the shares jumped roughly 10% after the social-media stalwart reported better-than-expected earnings.

Earnings of $1.71 per share beat estimates by a penny, while revenue of $17.74 billion grew more than 17% year-over-year and topped estimates by $520 million. 

Further, daily and monthly active users grew by 11% and 10%, respectively, and both topped expectations.

So why is the stock having trouble rallying, up just 5% to around $204 on Thursday?

The answer is simple: Facebook stock had already reclaimed a bulk of its losses and enjoyed a robust rebound ahead of the print. Twitter’s  (TWTR) - Get Report underwhelming report likely took some air out of Facebook’s sails as well. Same with the disappointing jobless claims data.

Going higher in Facebook from here is going to be more difficult for the bulls. Let’s look at the charts.

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Trading Facebook Stock

Daily chart of Facebook stock.

Daily chart of Facebook stock.

By rallying past $203 and hitting $210, Facebook stock is hitting several key points on the chart.

Most notably, the stock has filled its February gap back up to $210. In doing so, Facebook temporarily climbed back above the 78.6% retracement, as the shares have now recouped most of the coronavirus-induced losses.

Now, Facebook sits at an interesting area. Does it continue higher, again reclaiming the 78.6% retracement and pushing through the $210 gap-fill mark? Or does it pull back below $203 and threaten to break back below $200?

If it’s the former, it puts the $218 market on the table. That’s Facebook's first lower high from February, before the shares eventually rolled over and gapped down from $210 to $203. Above $218 puts $223 resistance in play.

Should Facebook pull back instead of break out, look for a move below $200. If it can hold up above $200, it may be able to consolidate its post-earnings gains and eventually continue higher.

Below $200 is a different scenario. It puts the 200-day moving average and the 61.8% retracement back in play. 

Based on the earnings report and bullish reaction, I would expect this level to act as solid support, provided the stock gets there.