Coming on the heels of Facebook (FB)'s 15% upmove since Oct. 15th, tonight's price reaction to earnings appears to be a tricky situation at best, and a dangerous situation otherwise.
Let's notice that FB climbed to a new all-time high at 81.16 today, which propelled the stock marginally above its Mar-Oct (dotted on chart) resistance line.
Thus far, FB has not accelerated to the upside after taking out the line, suggesting that investors are awaiting another bullish catalyst to buy the stock, which may or may not come in the form of a blow-out earnings report later today.
The juxtaposition of the price structure atop a mutli-month "Rising Wedge" formation in the aftermath of a 15% near-vertical upmove amidst unconfirmed momentum (RSI) seems to me to be a prescription for a "sell-the-news" reaction to EPS.
While I would not be surprised to see FB knee-jerk to still higher-highs into the 83-84 target zone, its current technical set-up is warning me that any such upmove is unlikely to be sustainable, and instead, will be used by investors to sell the strength ahead of a correction that should revisit the 73.00-70.00 support area relatively quickly.
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