Key Takeaways
- Meta shares hit a new record high Friday as investor optimism about the tech giant’s AI opportunities runs high.
- The relative strength index confirms bullish price momentum in the stock, but also warns of overbought conditions, opening the door to short-term profit taking.
- Investors should monitor key retracement levels around $535 and $480, while also monitoring chart-based bullish price targets at $700 and $790.
Meta Platforms (META) shares hit another record high Friday as investors continue to pile into the stock, impressed by the tech giant’s latest artificial intelligence (AI) and metaverse innovations revealed last week at the company’s Connect conference.
Earlier this week, the shares received a boost after Pivotal Research analyst Jeffrey Wlodarczak initiated coverage on the stock with a “buy” rating, pointing out that the Facebook and Instagram parent’s AI initiatives have it well placed to boost user engagement, helping the company gain market share in search and social media.
Meta shares were up 0.4% at around $585 in midday trading Friday. The stock has gained 65% so far in 2024, handily outpacing the S&P 500’s return of around 20% over the same period.
Below, we take a closer look at the technicals on Meta’s chart and point out key price levels worth watching.
Strong Price Momentum, Overbought Conditions
Meta’s price has continued to grind higher since breaking out from an ascending triangle last month, however, trading volumes have decreased throughout the move, potentially signaling a tiring uptrend in the stock.
Moreover, while the relative strength index (RSI) confirms bullish price momentum, it also warns of overbought conditions, opening the door to short-term profit taking.
Looking ahead, investors should eye several key retracement levels on Meta’s chart, while also monitoring a couple of bullish price targets we can forecast using technical analysis.
Retracement Levels to Watch
During an initial pullback in the stock, it’s worth keeping an eye on the $535 level, a key region on the chart near the ascending triangle top trendline that may have flip from providing prior resistance into offering future support.
A breakdown below this level could signal a potential trend reversal, leading to a retest of lower support around $480, an area where the shares would likely attract buying interest near the rising 200-day moving average and a range of similar trading levels on the chart between February and August.
Bullish Price Targets to Monitor
Forecasting chart-based price targets essentially works by using historical price action to predict future moves.
To project a price target using the measuring principle, we calculate the distance between the symmetrical triangle’s two trendlines near the start of the pattern and add that amount to the breakout point. In this case, we add $165 to $535, which forecasts a target of $700.
We can predict a price target using the bars pattern by taking Meta’s trend higher from December to March and overlaying it on the chart from last month’s low, a technique that forecasts a target of around $790.
The prior move, which also started from the lower trendline of an earlier ascending triangle, occurred over 62 trading days, meaning a similar trending move could potentially play out until early December if price history rhymes.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.