Shares of Meta Platforms, the parent company of Facebook and Instagram, could face further trouble based on a significant technical indicator. The stock recently dropped below its 50-day moving average, which measures the average price over the past 50 days and indicates a reversal from its previous strong uptrend. Despite CEO Mark Zuckerberg’s focus on efficiency and artificial intelligence, Meta’s shares have outperformed this year, with a rise of over 145%. However, the stock is currently hovering below the 50-day moving average, which now stands at $297.98. Market technicians closely monitor moving averages to gauge an asset’s momentum, and breaking below this level suggests a possible downtrend.
John Kolovos of Macro Risk Advisors notes that while breaking the 50-day moving average indicates pressure on the intermediate-term uptrend, the absence of a ‘top pattern’ suggests that a pullback or consolidation phase is occurring. The next support level for Meta is at $252.50, which should hold if the weakness is a normal pullback. However, failure to hold at this level could lead to a drop back to $215, bringing Meta close to its 200-day moving average at around $211. Analyst Carter Worth is closely watching the $265 to $270 level, where the 150-day moving average comes into play. A move below this range could result in a 25% retracement from Meta’s recent low to its high. Frank Cappelleri also highlights that Meta has completed a double top formation, a bearish chart pattern which suggests a potential steep pullback if the stock continues to struggle to break above a certain level. In terms of support zones, Cappelleri notes that there aren’t many clear areas due to the strength and persistence of Meta’s advance. However, failing to reclaim the area near its moving average could lead to a downside target of $250, representing a 13% decline from the recent close.