This article was originally published on June 13th, 2019. It was updated on August 7th, 2019.
Facebook ‘s privacy policies are under the microscope once again. Personal e-mails uncovered during an FTC investigation reveal Mark Zuckerberg knew of the company’s problematic privacy practices. Escalating antitrust concerns are not helping the bulls’ cause, either.
Facebook stock still hasn’t been able to fully recover from the crash in the second half of 2018, which dragged the price from $218.62 down to $123.02. How big Facebook ‘s privacy and antitrust troubles and what the market’s reaction will turn out to be remains to be seen.
Unfortunately for the bulls, there is an Elliott Wave pattern already in place. It indicates the bears are eager to take advantage of any potential bad news in the following months.
The weekly chart above reveals Facebook ‘s entire stock price history since the company’s IPO in 2012. Starting from the bottom at $17.55 there is a five-wave impulse pattern travelling all the way up to $218.62 in 2018. It is labeled (1)-(2)-(3)-(4)-(5), where the sub-waves of waves (1) and (3) are also visible.
Facebook Bears Waiting for a Catalyst
According to the Elliott Wave theory, a three-wave correction in the opposite direction follows every impulse. And indeed, the market totally ignored Facebook ‘s strong revenue and profit growth in 2018 and pushed the stock down ~43% by December.
It looks like this sharp selloff is also a five-wave impulse in the position of wave (a). If that is correct, the recent recovery to $208.66 must be wave (b), meaning wave (c) down can now be expected. The renewed scrutiny into Facebook ‘s privacy policies and escalating antitrust concerns can be the excuse the bears have been waiting for.
Of course, something totally different and unexpected can serve as the trigger instead. Nevertheless, as long as FB trades below $208.66, targets near $100 a share in wave (c) of II remain plausible. Once the 5-3 wave cycle is complete the odds will once again tilt in the bulls’ favor.
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