Chart of the week: A chance to trade this trending stock

TL;DR

Facebook's weekly chart shows a significant bull run followed by a crash, leading to a new bear market trend.

Transcript

hello this is John Burford and I'm covering Facebook for Monday the 4th of February this is the weekly chart and it shows the tremendous bull run from this low here which was the low established about a year after the IPO in May of 2012 at the $38 level and you can see it came down to about the 2022 dollar level and then from that point it embarked... Read More

Key Insights

• 🚄 The weekly chart shows a clear bull run followed by a crash, indicating a shift from a bull to a bear market.
• 💪 The overshoot above resistance is considered a strong signal of a trend reversal.
• 🧔 Bear markets tend to be shorter in duration compared to bull markets.
• 🧔 The market has experienced a potential bear market rally, but there is a likelihood of a turn back down.
• 😥 Fibonacci retracement levels provide insights into potential turning points in the market.
• 🍳 Breaking below the 50% Fibonacci retracement level suggests further downside potential.
• 😘 Consideration of the lower tramline as a resistance level for potential tops.

Questions & Answers

Q: How does the weekly chart of Facebook indicate a change in market trend?

The chart shows a strong bull run after the IPO, followed by a crash in July 2022 with an overshoot above resistance. This indicates a trend reversal and the start of a bear market.

Q: What is the significance of the tramlines mentioned?

The upper and lower tram lines connect multiple points on the chart. Their breaks or bounces can indicate changes in market direction. In this case, the break below the lower tram line confirmed the bear market.

Q: Why did the market bounce off the tramline after the crash?

Bouncing off tramlines is a normal occurrence in markets. After a significant decline, some buyers may step in at the tramline level, causing a temporary bounce. However, this bounce does not necessarily negate the overall bear market trend.

Q: What is a bear market rally?

A bear market rally is a temporary upward movement within a bear market. It might give the impression of a trend reversal, but it is often short-lived and followed by further declines.

Summary & Key Takeaways

• The weekly chart of Facebook shows a major bull run after its IPO in 2012, followed by a crash in July 2022, indicating the start of a bear market.

• The market experienced an overshoot, where it briefly rose above resistance before falling back below, confirming the trend reversal.

• After a bounce off the tramline, the market broke below it, further confirming the bear market. Currently, there is a potential bear market rally, but a turn back down is expected.