Introduction

More trouble could be ahead for shares of Meta Platforms, the parent company of Facebook and Instagram, based on a closely watched technical indicator. This month, the company broke below its 50-day moving average for the first time since December, signaling a reversal from its previous strong uptrend. Market technicians closely monitor moving averages to assess an asset’s momentum.

Background

Meta shares have outperformed this year, driven by CEO Mark Zuckerberg’s focus on efficiency and artificial intelligence. The stock has surged more than 145%. However, the recent drop below the 50-day moving average, which currently stands at $297.98, suggests the intermediate-term uptrend is under pressure.

Support and Resistance Levels

The next support level for Meta is at $252.50, which should hold if the weakness is a typical pullback. However, a failure to hold there could result in a move back to $215, bringing Meta close to its 200-day moving average of approximately $211. Additionally, market analyst Carter Worth identifies the $265 to $270 level as significant, as it aligns with the 150-day moving average. A retracement in this range would mark a 25% decline from Meta’s recent high to low.

Double Top Formation

In addition to falling below its 50-day moving average, Meta has completed a bearish chart pattern known as a double top formation. This pattern occurs when an asset fails to break above a specific level on two occasions. While Meta’s strong performance this year makes it difficult to identify clear support zones, a failure to reclaim the area near the moving average could result in a downside target of $250, representing a 13% pullback from the recent close.