Facebook (FB) stock has had quite a run since its Q3 earnings report back in late October. After that report I mentioned that a floor was likely in the stock and that a run was likely setting up:
“Technically, FB stock base been trying to find a bottom to a base for several months and the gap up move tomorrow morning may just be the beginning of a sustained move. However, as mentioned above, I think the stock will pull off the morning highs and possibly retrace most of the move in the coming days which could very well offer a nice entry point. This earnings report likely puts a floor under the stock at least for a few months.”
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That’s exactly what happened, as FB retraced the entire gap up and nearly retested the lows, offering a tremendous entry point at around the $20 level. From trough to peak, FB staged a nearly 70% move up in just two months. Not too shabby. However, the chart is showing signs of breaking down with a head and shoulders like formation and an inability to get back above the 50 day moving average. It’s difficult to say how far this correction will go, but it’s underway and in my opinion profits should be taken if you have a swing trade time frame and decent profits. It appears to me a move to around $24 is likely (another 12-15% lower)
