Lets take a look at FB’s 2-hour chart to determine where it might end up in the short run. Lately, Facebook has seen a strong move up from the $25 region and this is now catching the eye of investors/traders, leaving them with the question…. should they buy into this move or just sit on the sidelines?

What I want to point out is the large diagonal playing out from the start of November. If you are not familiar with diagonals, diagonals are just corrective moves in the larger trend, and can be extremely hard to trade since they can take quite a while to play out. Diagonals can play out as ‘leading’ or ‘ending’…. ‘leading’ would mean that we are in a consolidation type of pattern that is setting up for much higher levels. ‘Ending’ means that we are in a final push that would lead to much lower levels. So how do you know which one we are in? This can be a hard question to answer, but I believe there is a tell-tell sign of where we are going. The MACD is portraying negative divergence at a time that would not match a leading diagonal, but an ending diagonal. In all cases, ending diagonals are found at the termination points of larger patterns, indicating exhaustion of the larger movement. The MACD is showing that ‘exhaustion’ that we would see at a termination point…

So, where do we go from here, and how low do we go? Well, I am viewing this as wave (iii) of v or the final push in wave v (exhaustion point), which would indicate that we are going to see lower levels from this point on. I am still holding an open mind that we could see a small pullback, which would be wave (iv), and would leave us open to the final push in wave v. If we do get that push I expect us to stop up at $33.15-$34.80. Any breakdown below $28.64 would be the first signal that lower levels are going to be seen, with $25 being the nail in the coffin. Once those levels are broken I am looking for all time lows for FB. Since diagonals are corrective, and this move was up, this means that the larger trend is down since that is the impulsive direction of the social media giant.

Author: Peter Nitso

pnitso@yahoo.com

Twitter: @PeterNitso

The chart below is the GLD ETF weekly candle chart. According to technical analysis, gold is at an inflection point. This inflection point is a function of price being in-between the 50 and 100-simple moving average. Depending on your opinion of the 50-simple moving average, perhaps it can be ignored, for it is a short-term indicator and averages after the 50 are considered to be longer-term, even with weekly candle bars.

Opinions aside, the GLD has absolutely respected the 100-simple moving average. In May 2012 until July 2012, there were a total of six touches between the GLD and the 100-simple moving average. As price consolidated, tension was built and the result was a 10% rally.

The GLD has touched the 100-simple moving average about three times as of late, the white oval in the chart. This may be the beginning of similar horizontal consolidation or the calm before the rally. To the contrary, the SLV ETF lost its 100-simple moving average and it is now about to start having a negative slope for the first time in about three years! Silver, however, still has the support of the 150-simple moving average and the futures curve in gold is still pointing towards $1800 gold in 2017, see the charts below for details.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to… Author salernoma@mx.lakeforest.edu