While this week’s earnings release from Meta Platforms (META) is sure to inspire optimism for this leading growth stock, a look at the technical picture suggests that META still has a lot to prove before bulls can declare victory. META has been decidedly range-bound since Q1, fluctuating between support at $430-440 and resistance near $520-540. As can be seen on the daily chart, this sideways price action is eerily similar to what META has been going through in late 2023. After peaking near $320 in July 2023, META spent four months bouncing between price support near $280 and a retest of the July peak. Finally, buying power flowed in in November 2023 as investors pushed the stock above $320. A few weeks later, the price retreated to retest that breakout level and the 50-day moving average before reversing the three-month uptrend into Q1 2024. It is worth noting that in January 2024, the overbought condition of the RSI indicator was actually a kind of bullish sign for long-term investors, as it suggested that further gains were likely as the uptrend momentum picked up. Only after a bearish momentum divergence was seen in March, where the price was surging but the RSI weakened, did the new uptrend pressure dissipate and Meta Platforms settled into a new trading range. With the beaten earnings estimates this week, it is likely that META will test the upper limit of this new trading range. However, the weekly chart shows how much downside momentum this leading growth stock needs to overcome to break out of its recent consolidation phase. Here, we can see the recent trading range in a much better context, but also where momentum is weakening. Notice how the RSI is trending down in 2024, despite the price remaining in the range.The PPO indicator, a classic trend following tool, has also been trending downwards since recording a sell signal in April. The weakening momentum on the weekly chart suggests serious headwinds for META’s attempt to break out of its recent trading range. We may see a similar formation in the second half of 2023, but ultimately, the weekly PPO generated a bullish signal as the price finally broke out of the 2023 trading range and onto a new all-time high. In this multi-time frame review of META, we see striking similarities between the 2023 and 2024 trading ranges. The 2023 range finally broke out after seeing an upside break above a well-defined resistance level. Investors today may benefit by patiently waiting for a similar breakout before going all-in on META. -David Keller, CMT marketmisbehavior.com Disclosures: (None) All opinions expressed by CNBC Pro contributors are the contributors’ own opinions and do not necessarily reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliates, and may have been previously distributed by the contributor on television, radio, the Internet or other mediums. The above content is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect any individual’s unique circumstances. The content above may not be suitable for your particular situation. You should strongly consider seeking the advice of your own financial or investment advisor before making any financial decisions. Click here for the full disclaimer.
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