Facebook, Twitter and LinkedIn are among the biggest internet companies and still they are loosing big chunks of value.
Facebook is one of the biggest social networks in the world and has been in a big uptrend since September 2012. The company had two big impulsive rallies, which brought its value up almost five times. Since it is too early and more data is needed for a one-sided opinion, we will show you two possible developments – bullish and bearish.
According to the bullish scenario, Facebook has a three-wave structure, which means that it could have a little more upside to come for waves 3 and 5, separated by the corrective wave 4. Its not a good idea to trade fifth waves, if we do not have a clear flat or a triangle for the fourth wave, so it is best to wait for the market to clear the situation up.
Since the market is never wrong, we have to be ready with a bearish scenario, because the rally, which started in September 2012, could end up as a three-wave pattern. Yet we do not have any confirmation or indication, that Facebook will continue to rise. It is up to the market to decide.
If price makes a fresh new low under 55 dollars per share, the bearish scenario will gain more confidence and maybe Facebook will follow its counterparts.
Next on the list is Twitter, which has lost almost of all of its gains since December 2013. Twitter has a completed classic five-wave structure to the upside and could be forming a bottom now, after losing 44% of its value during the double zig-zag that followed.
If this is the correct count, Twitter should bounce up in the near future.
Similar to Twitter, LinkedIn also has a completed impulsive wave up, but only one of three finished corrective waves – W. We expect to see price action down to the 61.8% Fibonacci level around 140.
In one of our previous articles we warned investors about a possible meltdown in the stock market. It is too a early to say, whether this is a sign or not, but you should keep it in mind.
For those, who are not familiar with the Wave Principle, here is a sample picture of what happens when the five wave structure ends.
Check our education category for more info and specially our article about the basic Elliott Wave Patterns. You may also find one of our infographics useful.
