Black Monday for Facebook

October 05, 2021 11:56

The week began with widespread declines on Wall Street, with the Dow Jones, SP500 and Nasdaq falling 0.94%, 1.30% and 2.14% respectively. These declines continued the trend of recent weeks that is leading the major US indices in search of their respective supports. But, undoubtedly, the great protagonist of yesterday's session was Facebook.  

Yesterday saw moments of uncertainty in which once again millions of users around the world had to turn to Twitter to see what was happening with Facebook's applications. The popular social network, Instagram and WhatsApp all stopped working, resulting in its longest ever downtime. This situation lasted more than 6 hours in which some people were hopelessly forced to interact with the people around them, whilst the younger generation were left talking on Twitter about the potential apocalypse if WhatsApp and Instagram didn't come back online.  

Those who really did experience an apocalyptic day were Mark Zuckerberg and all the Facebook workers, as they watched the company collapse in the market for reasons that are still not entirely clear. The company indicates that the problems were due to "changes in the configuration of the trunk routers that coordinate traffic", although some hacker groups are claiming to be responsible for this situation, announcing the sale of the data of 1.5 billion users.  

Specifically, by the close of yesterday's trading session, Facebook had lost 4.89% in its share price, closing at 326.23 dollars per share. The session low was set at 322.70 dollars, which represented a fall of about 13 dollars from the opening price.  

This fall led the price to bounce off its 200-session moving average in red, thus continuing with the declines that started on 10 September, which led the price action to break down the important bullish channel that it had been following in the previous months.  

If we look at the daily chart, during the last few weeks the price has not only broken downwards through its important bullish channel, but has also caused a downward crossover of its short and medium-term moving averages and the entry into negative territory of the MACD indicator. Therefore, it is of vital importance that we study the price action at the current levels around its 200-session average.  

As we have commented on several occasions, the 200-session moving average is an important long-term support and resistance level, so the loss of this support level would confirm the change in trend - opening the doors to a further correction to the next support level around 305 dollars per share. In contrast, if the price manages to hold this important support level and form a floor, this could be a good point to start a possible rebound. 

Depicted: Admirals MetaTrader 5 – Facebook Daily Chart Date Range: 10 August 2020 – 5 October 2021. Date Captured: 5 October 2021. Past performance is not a reliable indicator of future results. 


Evolution of the last five years: 

  • 2020: 33.09%
  • 2019: 56.57%
  • 2018: -25.71%
  • 2017: 53.38%
  • 2016: 9.93%

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Roberto Rojas
Roberto Rojas Financial Analyst, Admirals Spain

Roberto is a Financial Analyst with a European Financial Advisor certificate and a Double Degree in Business Administration and in Actuarial and Financial Sciences. In 2013 was graduated as an Expert Manager in Equities