Charts point to big breakout for Facebook shares

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Charts point to big breakout for this FANG stock

Facebook shares were rallying Monday, despite a sell-off that blasted the broader markets.

The stock was up 2 percent in afternoon trading, and one top technician said the charts point to even stronger gains on the horizon as the tech giant continues its monster 2019 rally.

Facebook has climbed more than 25 percent this year, and even though it has underperformed over the past month, Carter Worth, chief market technician at Cornerstone Macro, said now is a great time to buy the dip if you don't want to get left out of the rally.

"I think there's an opportunity just as a catch-up trade," Worth said Friday on CNBC's "Options Action."

He added that, despite undercutting its October lows on Christmas Eve, the stock actually outperformed the S&P 500 on that day — and ever since.

"If you zero in on that, what we know is that the stock makes a new low. It undercuts its October low, but that is not the case on a relative basis, which is to say that even as it was selling off, it was actually outperforming the S&P, and that sets up what has been since, not only an absolute winner but a relative winner, and I think that's part of the opportunity," he said.

Worth went on to point out a volume-driven breakout integral to the stock's rise at the end of January when Facebook reported earnings.

"You've got something of a well-defined head-and-shoulders bottom, you have this well-defined top, and of course, you get that massive breakout," he said. "What I'm thinking is that you have this initial heavy-volume thrust, and you're going to get a second one all coming from the point at which it broke out, and we're going to do it again."

Worth also notes the importance of looking at the reciprocal of how this stock could trade higher — how hard it got hit in the first place, highlighting a similar structure beginning with the downward price gap last July.

"After gapping down, we had this very well-defined triangle, and what happened? We did it again. We've got the reciprocal [of that structure] going on here, and I want to play for a meaningful bump higher," he said.

Worth expects Facebook shares to rise another 10 percent from current levels.