Facebook - Closing in on a bottom.

Facebook - Monthly close basis

Facebook - Daily close basis



Facebook - SecondMarket (https://www.secondmarket.com/facebook-on-secondmarket/) has now released the price-data for Facebook dating back to April 2008. I have plotted the data into a spreadsheet and the outcome is shown above.
The low (on a monthly closing basis) for Facebook was in April 2009 at 1.11 and the high was just before the IPO at 42.72 in April 2012.
Looking at the chart from a wave perspective I have wave 1 from 1,11 in April 2009 up to 13.15 in August 2010 followed by a very shallow wave 2 down to 12.56 in September 2010. Wave 3 went from 12,56 to 31.46 in April 2011, at 31.46 wave 3 became almost exactly 1.618 times wave 1
(13.15 -  1.1 = 12.04 * 1.618 = 19.48 + 12.56 = 32.04) Wave 3 was only 0.58 points from the ideal 1.618 times wave 1 target.
Wave 4 became an expanded flat correction and ended at 30.38 in December 2011 from where wave 5 took of to 42.72. When looking for a target for wave 5 we will normally calculate three possible targets:
Target 1: Where wave 5 will be equal to wave 1, which would be at 42.42 - The calculation is as follows -((13.15 - 1.1) + 30.38) = 42.42

Target 2: Where wave 5 is 38.2% of the price traveled from the start of wave 1 to the top of wave 3 added to the bottom of wave 4 -
The calculation is as follows - (((31.46 - 1.11)*0.382) + 30.38) = 41.97

Target 3: Where wave 5 is 61.8% of the price traveled from the start of wave 1 to the top of wave 3 added to the bottom of wave 4 -
The calculation is as follows - (((31.46 - 1.11)*0.618) + 30.38) = 49.13

As we have a cluster in the 41.97 - 42.42 area we should expect a top near this area and the top at 42.72 fits perfectly.

If we have had this knowledge before the IPO would you have bought Facebook? I certainly would not have.

As can been seen on the chart we are now in a correction from the 42.72 (monthly close high) again we will normally calculate three possible targets for this correction and they are:

Target 1: 38.2% of the price traveled from the start of wave 1 to the top of wave 5 subtract from the top of wave 5, which gives us the following calculation - (((42.72 - 1.11) * 0.382) - 42,72) = 26.82

Target 2: 50.0% of the price traveled from the start of wave 1 to the top of wave 5 subtract from the top of wave 5, which gives us the following calculation - (((42.72 - 1.11) * 0.500) - 42,72) = 21.92

Target 3: 61.8% of the price traveled from the start of wave 1 to the top of wave 5 subtract from the top of wave 5, which gives us the following calculation - (((42.72 - 1.11) * 0.618) - 42,72) = 17.01

The closing low in July 2012 was 21.72 just 0.20 points from the 50% retracement target at 21.92.

The low on a daily basis has been 19.82 (see my post from August 8 here: http://theelliottwavesufer.blogspot.dk/2012/08/elliott-wave-analysis-of-eurusd-usdjpy_8.html), which would argue for a move closer to the 17.01 target. Once the correction from 42.72 is over we should see a new rally back towards the top of wave B at 33.44 as the first major target.

You will see that I have changed my count a little from August the 8 based on the new information I have now (see the the daily chart above). No matter what we should expect a bottom soon for a nice 96% rally.