Facebook - Peak expected at 187.17

Facebook - Peak expected at 187.17

Facebook - Peak expected at 187.17 

Facebook has seen an amazing rally since the September 2012 low at 17.55. This wave [3] rally should be close to completion - Ideally near 187.17 for a correction in wave [4]. As wave [2] was a simple and deep zig-zag correction, we should expect a complex and shallow correction in wave [4]. The ideal target for this wave [4] correction is seen in the 114.77 - 115.93 area.

The corrective structure of wave [4] should be either a flat or a triangle consolidation. If the corrective structure proves to be a triangle, then the low will be seen early (likely in the A-wave down).

Short-term a break below minor support at 168.89 will be a good indication that Facebook has peaked in wave [3] and wave [4] is developing. So tighten up your stops and don't fall in love with Facebook at these levels.

Facebook - Is about to lose a lot of friends

Facebook - Is about to lose a lot of friends

Facebook - Is about to lose a lot of friends 

Since the September 2012 low at 17.55 FB has rally almost 690% and gather a lot of friends. However, FB is about to lose some of its friends in the months ahead. 

From an Elliott Wave perspective a five wave rally has been seen of the 17.55 low. The Elliott Wave Principle states that after a five wave rally a corrective decline should be seen. The five wave rally  in wave [3] from 17.55 most likely ended at 121.08 and a corrective decline in wave [4] is about to unfold.

So where can we expect wave [4] to end? Normally the low of wave 4 of one lessor degree, will be the main attraction. In the case of FB that means a decline to 72.00 or very close to a 50% correction of wave [3].

Since the low of wave 4 of [3] we have seen a pretty slow rally with overlapping waves, which is the signature for an ending diagonal. Once the ending diagonal is complete a decline back to the origin (in this case the low of wave 4 at 72.00) should be seen within half the time it took the ending diagonal to build. As it took 37 weeks for the ending diagonal in wave 5 of [3] to build, we should expect a decline back to the 72.00 low within 18.5 weeks.

The trigger for the expected decline, will be a break below the ending diagonal support-line near 116.00 and confirmation that a top is in place and the correction in wave [4] is developing will be a break below support at 106.31.

Even though a quick decline to 72.00 is expected, the entire structure of wave [4] will most likely be much more complex. The Alternation Principle says, that if wave [2] was a simple correction and it was, as it unfolded as a zig-zag, then wave [4] should become complex and take up time. So we could be looking forward to a combination of corrections or a triangle as wave [4], only time will tell. However, the important thing here is that we have a very good idea, what to expect from wave [4].    

Facebook - Topped at 86.07

Facebook - Topped at 86.07

Facebook topped at 86.07 

I have been looking for confirmation that a top was in place at 86.07 and yesterday saw the first close below the support-line from 54.66 and at the same time, we saw support at 77.26 pierced, these two breaks of support does indicate that a top is in place at 86.07 and a correction of wave [3] now is about to unfold. The first corrective target for this correction is found at 69.48, which marks the 23.6% corrective target, but a more likely target is the 38.2% corrective target at 59.55, which is also close to the bottom of wave (4) of one lessor degree.

If you look back in my previous posts you will see a post from March 24 where I mention the possibility of an ending diagonal (you can see the post here). That post was filed at the very same day that the top at 86.07 was being set. I that post I also said that the top likely would be found in the 86 - 87 area and it certainly did.

Well this ending diagonal count is as valid as the count shown above and this count also calls for a correction unfolding. Whenever an ending diagonal is finished, we should expect to see a return to the origin of the formation, which in this case is at 43.55 and it should take half the time it took for the ending diagonal to develop, which would call for a decline to 43.55 (about a 50% decline from the top at 86.07) in about 6 - 9 months.

Let me say already, if a decline to 43.55 is seen, that would call for a relabeling of the larger picture, but ultimately be much more bullish long term.  

Facebook - Ending diagonal finished


Just wanted to send a word of thanks for all of the hard work that you
do, and to show you that I personally have paid for my subscription many
times over with the fantastic work that you...
Hey EWS,

I just wanted to thank you for your insight and your vision.

The Crude Oil call was spectacular as well as the SP 500 call. Just to name a few.

I appreciate all that you do.

Love the good work, most accurate I’ve found in my research. Darryl