Facebook (FB) made a four month rally from its December low but prices have rolled over and weakened enough to raise the risk of holding long positions. Let's review the charts and indicators to see what the summer may bring and what chart points to monitor.
In this daily bar chart of FB, below, we can see that at end of May prices closed below the rising 50-day moving average line, and in just a few days FB declined to test the flat 200-day moving average line and support at the lows of February and March.
Prices bounced earlier this month but stopped at the underside of the 50-day line. The daily On-Balance-Volume (OBV) line peaked at the end of April and signals that sellers of FB have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator signaled a take profits sell in early May and fell below the zero line at the beginning of June for an outright sell signal. If prices move higher from here we could get a cover shorts buy signal but further price weakness will probably keep this indicator bearish.
In this weekly bar chart of FB, below, we can see how important the $160 level has become. A close below $160 will mean many recent longs are "underwater".
The weekly OBV line shows a peak at the beginning of May and the MACD oscillator on this longer time frame is crossing to the downside for a take profits sell signal.
In this Point and Figure chart of FB, below, the software now indicates a downside price target of $161. A break of $160.21 is likely to precipitate further weakness.
Bottom line strategy: The key levels to watch on FB are a close above $182 and a close below $160. Weakness below $160 should mean a deeper decline while a move over $182 could give a retest of the April highs.