Watch These Meta Platforms Price Levels After Stock's Record Close

Shares in Facebook and Instagram parent Meta Platforms (META) remain in focus this week after soaring 5.9% to a new record close on Friday. The stock was buoyed by recent commentary from analysts at Bernstein who pointed out that the company’s significant investment in artificial intelligence (AI) is starting to translate into revenue growth through users spending more time on the social media giant’s apps.

Below, we take a closer look Meta’s weekly chart and point out important technical levels to watch out for.

Breakout from Pennant Pattern

Since bottoming out in October last year, Meta shares have trended sharply higher, with gains accelerating after the 50-week moving average (MA) crossed above the 200-week MA in late November to form a golden cross, a chart signal that typically predicts rising prices. More recently, the stock broke out from a pennant pattern on Friday that suggests a continuation of the longer-term uptrend.

However, investors should still exercise a degree of caution as several technical indicators point to slowing price momentum. Firstly, share turnover has trended lower since early February. Secondly, as the stock made a higher high last week, the relative strength index (RSI) made a shallower higher to create a bearish divergence.

Measuring Principle to Project Upside Price Target

If the stock continues to move to the upside, we can project a potential price target by using the measuring principle. To do this, we calculate the distance of the most recent leg higher in points preceding the pennant and apply that amount to the pattern's top trendline. 

In this case, we add $257 to $510 that projects a price target of $767, which sits about 42% above Friday’s closing price. This provides us with a general area on the chart where Meta’s shares may run into overhead resistance, particularly if other indicators are simultaneously pointing to overbought conditions at the same time.

Monitor These Levels During Periods of Profit Taking

During retracements, investors should keep an eye on two key levels on the chart that may attract buying interest.

The first level to watch sits around $384, an area likely to find support from the stock’s prior August 2021 high that aligns closely with the rising 50-week MA.

A close below this level could see the shares fall to around $300, where they would potentially attract buyers near the 200-week MA and a multi-year horizontal line linking a range of price action between August 2020 and October last year.

Meta shares were up 0.4% at $542.15 in premarket trading about two hours before Monday's opening bell.

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As of the date this article was written, the author does not own any of the above securities.