The shares of META, the NASDAQ-listed owner of Facebook, recently reached overbought levels as the stock price rose above its upper Bollinger Band and its Relative Strength Index climbed above 70. This suggests that META is likely to enter a period of sideways consolidation or perhaps experience a sharp decline.
However, traders should also pay close attention to a potentially larger reversal pattern known as a 2B top, which may currently be forming.
A 2B top is similar to a double top pattern, but typically the second high slightly exceeds the prior high before reversing. In this case, the high on 30 June 2025 exceeded the previous high set on 14 February 2025. The stock then fell sharply on 1 July, and if it continues to decline below support at $700, this would confirm the 2B topping reversal pattern.
Additionally, a break below support at $700 would signal the end of the uptrend that began on 1 May and also push the price below the 10-day exponential moving average, further confirming a trend reversal.
A decline below $700 could see the shares fall significantly, potentially erasing much of the gains recorded following the US-China trade negotiations held in Switzerland on May 12.
Notably, a price gap exists at $593, created by the announcement following those talks.
Alternatively, if the stock holds support at $700 and continues the uptrend, the 2b top is invalidated, and traders should look for even higher prices from this AI giant. The nice thing about the 2b topping pattern is that it provides an easy-to-identify invalidation price, which in this case would be above $748.
Written by Michael J. Kramer, founder of Mott Capital Management.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
However, traders should also pay close attention to a potentially larger reversal pattern known as a 2B top, which may currently be forming.
A 2B top is similar to a double top pattern, but typically the second high slightly exceeds the prior high before reversing. In this case, the high on 30 June 2025 exceeded the previous high set on 14 February 2025. The stock then fell sharply on 1 July, and if it continues to decline below support at $700, this would confirm the 2B topping reversal pattern.
Additionally, a break below support at $700 would signal the end of the uptrend that began on 1 May and also push the price below the 10-day exponential moving average, further confirming a trend reversal.
A decline below $700 could see the shares fall significantly, potentially erasing much of the gains recorded following the US-China trade negotiations held in Switzerland on May 12.
Notably, a price gap exists at $593, created by the announcement following those talks.
Alternatively, if the stock holds support at $700 and continues the uptrend, the 2b top is invalidated, and traders should look for even higher prices from this AI giant. The nice thing about the 2b topping pattern is that it provides an easy-to-identify invalidation price, which in this case would be above $748.
Written by Michael J. Kramer, founder of Mott Capital Management.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
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