Brean's Chief Market Technician Sees Facebook Chart 'Built for a Huge Continuation Triangle'

• Facebook Inc FB shares have gained 19 percent year-to-date, while remaining largely range-bound between $82 and $98 since July 21.
• Brean Capital’s Frank Longman believes that a continuation triangle would be the most likely outcome of the trading pattern of Facebook’s stock, although it could be bumpy.

Analyst Frank Longman said that Facebook’s shares had lost 27 percent between the late July highs and the late August lows. “The bulk of the low end of that range came during the 8/24 liquidity vacuum where meaningful size was not accessible.”

While Facebook continues to be a "spotlight" name, the main question is whether there can be a straight line breakout since there are significant broad market headwinds, Longman commented.

He added, “After examining the price pattern and indicator basket, the most likely price path resolution seems to be some form of (upside) continuation triangle the likes of which we've drawn here along with key support and resistance levels.”

Longman believes that it would be normal for Facebook’s share price to “consolidate with the confines of a larger continuation triangle before a Q4 breakout.” He advised to look for this pattern to form and trade the stock accordingly.