Last updated July 5, 2019
Daily chart: Has literately moved only 3% since my mid-June update. Like all other FAANG stocks, also this one has not made a new ATH (yet?!) nor surpassed it’s May highs. The two counts shown are still operable and a break above that May high can target that elusive gap fill.
In this update I wanted to share with you a possible alternate Elliott wave count: Primary-V is still underway and forming an ending diagonal (see weekly chart below). Namely when a company IPO’s one doesn’t know for sure where in its business cycle it is. When the pop and drop they often completed a large business cycle; C1. Or they drop and then rally, which could mean a new business cycle as well. It simply takes a lot of growth cycles to get to an IPO in the first place. So, in the case of FB, its IPO may have been only major-3 (or primary III); but the wave-degree is at this stage less important (since we don’t really know it anyway; and if you do know, please let me know why because I’d really like to know! 🙂 ). Bottom line, it means the whole 2012-2018 rally was major-5 of Primary III as shown below. Cont’d below chart.
The decline into 2019 was IN THIS CASE primary IV and a 44% decline off the ATH. A bit more than the usual 38.2% retrace for a 4th wave, but still acceptable. Now, and more over, we can also see that FB has had at least three ending diagonal 5th waves and arguable three (the rally from its April 2018 low to the July ATH high. So diagonals are certainly no stranger for this stock. Since ending diagonals occur in 5th waves and IF primary V is underway, it has a high chance of becoming a diagonal as well. (see also AMZN).
With that in mind, the recent rally (labeled as (black) major-1) was clearly only three waves. Perfect, since ending diagonals always move in 3-3-3-3-3 patterns. Thus the first 3 has completed, as well as the second 3 (wave-2) and now the third 3 should be underway: wave-3. The problem with EDs is, welll…, their three-wave patterns: hard to predict as there are no real hard and fast rules on how long each wave must be, or how much each retrace must be. All we know it will be three-wave patterns. But in general it simple means higher prices and a break above the ATH puts this count front and center and targets $255 for wave-3 of V. Price will have to break below the June low to suggest Wave-II to around ~$50 is what is really transpiring. So given that price is above its rising 20d, 50d and 200d SMA, which are Bullishly stacked (20>50>200) the Bulls get the benefit of the doubt in a “choppy” wing 😉