The last time I posted about FB was October 24 [see: CIW Oct 24, 2012], when I happened to hear Donald Trump repeatedly mention the stock as he was being interviewed about something else all together.

BTW, interesting chart on Facebook.  I knew something was up when I heard Donald Trump touting the stock on the radio.

He…still managed to mention the large position he’d been buying about 5-6 times.  More likely he was going for the ol’ pump and dump.

It’s hard to escape the power of channels.

The channel in question had been stretched to the limit by the gap up from 19.5 to that day’s 24.5 high and looked like this:

The channel de-friended FB, smacking it back down to below 19 within the next two weeks.  But, since then, the amazingly positive stock market to the moon has taken hold, trumping that falling channel.   The stock has retraced about half the losses since its 45 high (the white Fib levels below.)

Unfortunately, it’s also traced out a Rising Wedge — not to mention a Bat Pattern from its June highs (the purple Fibs above.)  As such, it is likely to weaken considerably here — with a drop to at least the bottom of the rising wedge — currently at 27.75 or so.

Judging from the charts, though, I’d say FB is a good candidate for a breakdown of its Rising Wedge.  Often, this results in a new channel that features a lower bound parallel to the upper bound of the wedge.

The mid-line of the proposed channel is at 27 (a 10% drop from current prices), and the bottom is way down at 22.75.  The good news is that the channel is obviously rising, so these potential targets are also on the rise.

The bad news, however, is that the charts indicate the trend may well have changed and the downturn could be more significant than just 10%.  4-hr MACD just crossed over yesterday (60-min is already negative.)

And, the rising daily RSI channel is probably yielding to a falling channel — signalling a trend change to go with the obvious negative divergence.  Though, we won’t know for sure until RSI reaches the bottom of the white channel.

Bottom line, the road ahead should be very bumpy.

Stay tuned.