I was just going over the Facebook chart after today’s trading session ended. I noticed something…
First, let me tell you that I am not a technical trader at all. I am a fundamental analyst when it comes to stocks. However, I have been learning the art of technical analysis recently, and already knew some before.
This is a screenshot of the chart I just made. Each candle stick you see, represents one trading day. Is a double bottom forming?
A double bottom is exactly what it sounds like; a double bottom. It is a reversal pattern to the upside, meaning: after a bearish trend (downward trend), a double bottom might signal a reversal to the up side (bullish trend). But it does come with a couple caveats:
- Two troughs, the first one usually lower than the second
- A peak in the middle
- Usually take 1 to 3 months to form
With that said, here is what I notice about the Facebook chart shown:
- It looks like 2 troughs, and the first one is slightly lower than the second one
- It has a peak in the middle
- And it has been about a month to month and a half since it started
However, to confirm a double bottom, it must break out above the highest point of the peak in the middle. Confirmation for this potential double bottom will not happen for a a little bit, if at all.
Facebook has had a rough go since their earnings report a couple months ago. I have seen all of this as a great buying opportunity, as from a fundamental standpoint, I think they are on fire! The market has been disagreeing with me. But I think my luck will soon change… I hope anyways!