Facebook, Inc. FB (NASDAQ) is an American social media conglomerate corporation based in Menlo Park, California. The stock has been rallying since the COVID crisis began. Investors and analysts alike are concerned with just how justified the value of the company is and where the stock may be headed in the future. We’ll be spending some time looking at the technical indicators to help us understand where Facebook might be heading, and provide a Facebook stock price analysis.
Again I wanted to show you all the power of simple moving averages. A classic among economists it averages the price of the stock over the last period of days and displays that against the graph. The idea is that if the price line crosses the moving average line from below its indicating a buy signal. Vise versa for a sell signal.
This is a basic concept and we can improve on it. We can see that the price has penetrated the blue (10 day average) by 25th June and the red (50 day average). In each case indicating sell signals as the price penetrated from above. If we combine the two lines red and blue we can generate a third sell signal. When the shorter period (blue) penetrates the longer period (red) from above a sell signal is formed. This has not happened yet, we can see a buy signal has formed in April. However now we can see the blue and red lines have begun to converge. When they meet it will indicate a sell signal. We can further expand on this by adding different day averages and even more averages to the one graph. This would generate more insights for us.
With all this said it is always important to remember to diversify your investments to ensure that you are less sustainable to market volatility and rapid market movements. Also if you are new to investing make sure you look into trading with a demo account to practice, more information on that can be found here.
The Moving Average Convergence (MACD) is a trend momentum indicator that shows the relationship in this case between the 12 day and 26-day moving averages. It is commonly used as a buy or sell signal if the MACD 12 day line (blue) crosses the 26-day signal line (orange) from below, It indicates a bullish buying signal. This is because the shorter 12 day moving average has diverged from the long term moving average and upside momentum is occurring. Since the blue line has penetrated the orange line from above a sell signal has formed. This indicating that there could potentially be a decrease in price in the future.
As an investor it is so important that we consider all the facts before making a decision because that’s the only way we can ever be sure we can make the right one. However before you can use market insights to better your decision making it’s important first to learn how to trade. Previously we did similar analysis with Beyond Meat in order to best understand where the price might head before the stock skyrocketed to where it is now. Likewise our Rite Aid stock price analysis yields similar details.