Meta is expected to report earnings of $2.91 on revenue of $31.08.

Meta’s stock is currently trading at around $295.08 a share. Looking at the stock from a technical viewpoint, we can see a great bullish run since the start of the year. The support is well established below with plenty of levels to test if the price was to slide or retrace. The tech giant is expected to report earnings tomorrow, as the bias remains bullish and there has been a retracement over the last few days, we are looking at the upside. Dependent on the earnings outcome, the retracement could extend towards the trendline where support is based at $279.75. We then would look at a bounce higher (as long as earnings are positive), or you could just see a move back up towards the high of this year at $318.67. Though this may take several days to reach and is also not guaranteed. The reason why moves to the upside on positive earnings aren’t guaranteed, is because we have to look at other companies and current investor sentiment. For example, Tesla beat earnings last week but its stock still fell over 10% as investors claimed that earnings were more limited due to the current economic and market conditions. But of course, Meta is in a different industry with different competitors (another factor to consider).

On the other hand, we also have to take into consideration the history of the technicals. If we look at the white ovals drawn on the MACD indicator and the chart, we can see on those two occasions the MACD turned negative and the price moved a little sideways before rising higher. Could history repeat itself? We can see the MACD has turned negative in recent days with a bigger move lower, the RSI was also suggesting that the stock is overbought which led to some profit-taking. However, is this now an indication that the price will continue lower or was the stock just correcting itself before the earnings?

 

Note: investors should be cautious when trading/investing around earnings releases.