Facebook's quarterly report succeeded in more ways than it failed, especially in hindsight of all of the controversy that has plagued the company recently. The correction of the share price appears to have bottomed out, which is good news for the tech sector as a whole. Check out our newest analysis of the Nasdaq Composite to read about the broader market sentiment on Big Tech.
Late last night, Facebook posted its earnings report for Q3. The social media giant's earnings beat the preliminary forecasts, which allowed the company's share price to advance in extended trading on Monday.
As can be seen on the daily chart above, the correction appears to have bottled out around the major resistance-turned-support level at 330.00. The latter represents the upper end of a broader range, whose lower limit is underpinned by the psychologically significant support level at 300.00.
The expectations for a subsequent bullish rebound are substantiated by the fact that the dropdown was held back by the 200-day MA (in orange), which currently underpins the major support level at 320.00.
Moreover, the correction itself appears to be taking the form of a Descending Wedge, which is a type of pattern that, whenever found within an established uptrend, tends to indicate likely trend continuation. A breakout above its upper limit would confirm this.
Meanwhile, the crossover between the 100-day MA (in blue), currently at 350.00, and the 50-day MA (in green) indicates the first major test for the uptrend once it is reinstated.
If the price action manages to break out above it, the rally would then likely be extended towards the previous swing peak at 380.00. The latter underpins the highest resistance level ever.
According to the findings of the report, Facebook's Earnings Per Share (EPS) rose to $3.22 in the third quarter vs $3.19 expected. Despite the better-than-expected performance in the three months leading to September, the company's earnings fell from the $3.60 EPS that were posted over the previous quarter.
Revenue was reported at $29.01 billion vs $29.57 billion expected.