Chart points to new highs for Facebook: Technician

FANG stocks have broken out this year, and one technician says that one name in particular is headed for new highs when it reports earnings this week.

Facebook, Amazon, Netflix and Alphabet are up a respective 13, 10, 13 and 4 percent in 2017, outperforming the broader market, which is up more than 1 percent this year.

But Carter Worth of Cornerstone Macro notes that an interesting pattern on the Facebook chart leads him to believe a bigger breakout is afoot.

"It looks like a 'triple bottom' of sorts [has formed on the chart]," Worth said Friday on CNBC's "Options Action." A triple bottom is a pattern technicians often recognize as a bullish reversal in trend. The stock had sold off in October on the heels of fake news problems and miscalculated ad metrics. It has since recovered those losses.

In addition to the triple bottom, Worth noted a distinct uptrend on a five-year chart and said the stock is on pace to follow the trend.

He added that with the stock sitting close to the prior high of $133.50 and with the earnings news coming on Wednesday, "you're either going to [an] earnings breakout or earnings disappoint."

"We're going to bet that Facebook is going to exceed that high on its news."

Shares of Facebook were trading above $130 on Monday, down more than 1 percent from Friday's close.

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Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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