A few weeks ago, when Facebook shares were trading around $48, I had posted an article on Forbes saying we will see Facebook at $58.73. There was an immediate challenge of picking a short term low for the fourth wave, with one possible level being 47.40. But this was supposed to be a complex correction and it allowed further mild weakness before we went higher. And sure enough, after dipping to a low of $43.55, Facebook went roaring back to a high of $58.58. How high can this go, and what is the prognosis after we complete this up move?
Elliott Wave Analysis of Facebook
Elliott Wave analysis, as explained in my book ‘Five Waves to Financial Freedom’ is very effective to determine one’s trading and investing tactics. We know that the fifth wave can be equal to the first wave, and if you look at the first chart below, you can see why we got a quick sell off from near 58.60. The reason was many professional traders who know about the power of Elliott Waves would have sold near there. But there is also the underlying human emotion that giverns mass psychology. The general public is not so easily put off, as they still see buying opportunity at every dip. This is what culminates into a fifth wave.
Target for Facebook Fifth Wave
There are two other ways of anticipating the target for fifth wave. We can compute a 38.2% or 61.8% measure of the distance from the start of wave 1 to the end of wave 3. Occasionally, we can also see it finish at the 50% measure of this distance. the measure so computed is added to the bottom of the fourth wave to get the potential target for the fifth wave, and doing this as shown in the chart of Facebook below gives us the potential turning points. But first, take a look at the subwaves of the fifth wave in the higher degree. You can see that the 3rd wave had extended to reach 300% of the first wave.
Where will Facebook finish its fifth wave and outlook for the stock
Typically, when a third wave extends, there is a higher chance for wave 5 to reach the 61.8% target. However, as always, it never pays for an investor to wait till the very last cent! So, I would suggest exiting all longs from near 59, and to start turning cautiously short, selling a larger amount as we get above the $62 mark. Because we will now be correcting not just the fifth wave, but also the entire five wave movement that started from below $18, you should expect the correction to be quite significant. At the very least, I expect the correction to last over 3 months, and the price to decline by at least 15%. Having this kind of expectation is possible only with the deft use of Elliott Wave Principle. You too can profit by mastering this theory and start taking low-risk trades. Good luck.
11 Comments
Hello Sirji,
I remember that just after couple of months of facebook came into secondary market, in an interview, some one asked you about the outlook of FB.
At that time it price was $32 and you predict from the hourly chart that it will be best buy around $19.
and it just reached around there and take U turn and now it is around $58.
Your this prediction was very Great Sirji.
and such prediction inspires me to learn more and more about Elliot waves.
Thank You for your regular updates on markets.
-Abhishek
Ramki,
I am pleased to see your wave count on FB as I had the same count up thru Wave 4. (and I didn’t see your Forbes article, but have read your book several times) For the projection of Wave 5, why wouldn’t you use 61.8% of 0-3 of Waves 1-3? This projects to 64.67.
I understand trying to look at Wave 5 internal structure but don’t see Wave i, doesn’t look like 5 waves. I am wondering if your waves 0-iii of Wave 5 is actually wave i and wave ii completed at 53.43 and we are now in wave iii of Wave 5.
Again, love your book and constantly refer to it and re-read it. Thank you.
Joe
Hello Joe, Thank you for your comments. When you take the sub waves of the 5th wave, it doesn’t matter where wave i is placed in order to compute the final point for wave v. It is more important to correctly figure out the end of wave iii. It is of course possible for FB to reach 64, but even if it does, we will still get a correction from there, and an investor who exits above 59 needs only to be patient for some extra time because we will eventually get a dip back to prior wave 4. I am glad you like the book, and I hope it makes you very profitable. Good luck.
Nice Predictions
Hi,
Your targets for FB are calculated way early . 4th wave has 43.60. Can you please explain your reasoning behind 4th wave target of 53.445?
Thx
Kiran, the markets have since changed dramatically and FB is already above 61.
Mr Ramki FB has reached 64-65 . Do you still see a pullback to wave 4 or has the next wave up already started towards 74
Thank you
Mr Ramki
FB has reached 71. When will the pull back occur?
John, Thanks for writing, In this blog I am not offering any trading advice.
hello ramkiji….im a student,ive read your books,ive followed you when services were free.i cannot afford your premium services since i am a student.i have followed you extended 5th wave in rcom,and usd inr.i am a beleiver in the extended 5th wave that it retraces quickly to the prior 2nd of the extended ….i was studying unitech chart.it is traded in india.in nifty.i think extended 5th was done at 10.85.please please please….label the unitech chart and post it on one of your free services for people like me.also give targets.thanks and regards ….rajesh(india)
Rajesh, Thank you for writing, I dont think we have seen any extended 5th wave in Unitech. Good luck