You Ask, We Analyze: Why Meta Platforms Shares Must Hold This Key Level

On Thursday evening, Benzinga asked its followers on Twitter what they’re buying at the open on Friday. From the replies Benzinga selected one ticker for technical analysis.

@RichardJudge17 and @dream_shinezuun are buying Meta Platforms, Inc FB and @ger2619 asked, “will it go under 200?”

Meta’s fall from its Sept. 1 all-time high of $384.33 accelerated on Feb. 3, when the stock gapped down over 24% following a bearish reaction to the company’s mixed fourth-quarter earnings report. Since that date, Meta has continued to trade lower, suffering through a number of bearish headlines.

On Wednesday, Alphabet, Inc GOOG, GOOGL announced plans to introduce new privacy restrictions across its Android smartphones, which will help to curtail companies that use software to track consumer behavior. Apple, Inc AAPL made similar privacy changes last June, which made Meta’s advertising less effective and contributed to a wipeout of over $300 billion from Meta’s market value.

On Tuesday, Texas Attorney General Ken Paxton filed a lawsuit against Meta for its use of facial-recognition technology, which violates the state’s privacy protections. Paxton says Meta has violated the law tens of millions of times in the state and is seeking a $25,000 civil penalty for each violation of the Use of Biometric Identifier Act and $10,000 for each violation of the Texas Deceptive Trade Practices Consumer Protection Act.

The onslaught of bad news has forced Meta to lose another 5% of its value just this week alone but there are signs the stock is likely to bounce, at least, over the coming days and bullish traders can watch for signs of a reversal as it approaches the key $200 level.

See Also: Kevin O'Leary Is Calling The Bottom In Meta Platforms Stock: 'This Is Where You Want To Accumulate'

The Meta Chart: Meta is trading in a confirmed downtrend making a consistent series of lower highs and higher lows. The stock’s most recent lower high was created on Feb. 10 at the $235 level and the most recent lower low was formed on Feb. 8 at $216.15. Meta has since fallen below that level but has not yet confirmed the next lower low has been printed.

Meta is trading lower within a falling channel pattern on the daily chart, between two descending parallel trendlines. The pattern is considered bearish until the stock breaks up from the upper descending trendline on higher-than-average volume. If that happens, it's a powerful reversal signal that a larger move to the upside may in the cards.

The stock is due for at least a bounce because its relative strength index (RSI) has been hovering between about 21% and 28% since Feb. 3. When a stock’s RSI reaches or falls below the 30% level, it becomes oversold, which can be a buy signal for technical traders.

Meta is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.

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• Bulls want to see Meta print a reversal candle such as a doji or hammer candlestick above the important $200 level and then for the stock to reverse course to the upside and break bullish up through the falling channel, which could help Meta to regain the eight-day EMA. The stock has resistance above at $216.15 and $230.31.
• Bears want to see big bearish volume continue to push Meta lower within the channel until the stock loses support at the psychologically important support zone at $200. Below the level, the stock has support at $190.14 and $181.50.