26 May FB long term analysis
As you can see, this market has been developing in a stable growing trend, which began in the second half of 2013. The start of uptrend occurred on the background of extremely high volumes that can be interpreted as the activity of institutional interests that have invested their capital in shares of the Internet giant.
Since then, shares of Facebook steadily increasing its cost, most time they acted stronger than the stock market index, which is indicated by a gray broken line.
The structure of the trend is indicated by the blue lines. The Central axis is confidently directed upwards. The additional lines indicate the degree of deviation of the quotes from the main trend line.
In recent days there has been a rapid growth of the stocks Facebook. Action even updated the historical maximum in spite of the fact that the total market index has not yet returned to levels achieved before the start of a pandemic coronavirus.
What is the reason that the action is much stronger than the overall market?
The first reason may be the number of Facebook accounts has increased in obstacles of quarantine measures. Thus, according to Zephoria, as of March 31, 2020 there are more than 2.6 billion active monthly users (MAU). This is 10 percent more than in MAU Facebook compared to last year. Users are showing strong activity on social networks, being on a forced vacation. According to official data, more than 2.3 billion people have access to at least one of their services every day.
The second reason is the new service SHOPS. It allows owners of business accounts to open online stores.
Mark Zuckerberg stresses that it is the easiest to go online to trade, and small businesses who may now be in a quandary in conditions of a pandemic have a wonderful chance to use the situation and start online sales even if they didn’t exist before.
Given the above information and facts, we see that FB is definitely a candidate to open a long position. But the price already looks too overbought. The current bullish momentum could easily reach the upper dotted line and form an extremum of about $ 250 per share. But a more sensible solution would expect a pullback to the area of the Central trend line to add this asset to your portfolio at a more reasonable price.