Let’s highlight the trend, trading levels, and possible trades setting up right now:
Facebook (FB) meets the textbook definition of strong trending stock (’strong getting stronger’) with a rising trend, rising moving averages, and persistent series of higher highs and higher lows.
Price tends to retrace (pull back) in the context of a long uptrend, as we can see above.
I highlighted four similar spots where price jumped above the upper Bollinger Band and then pulled back (retraced) either to the rising 20 week (green) or 50 week (blue) moving average.
At this point, the chart suggests caution ahead of a likely new pullback or retracement.
Where might price retrace and what is the trade – if you’re willing to take it?
Here’s the Daily Chart for clarity:
We see TWO pullbacks (retracements) in clearer detail on the Daily Chart (see Weekly Chart).
What’s happening right now?
Price is trading down away from the $117.00 per share level (the prior high and upper Bollinger Bands) toward a lower support target.
Shares achieved the first target on the Daily Chart which was the rising 20 day EMA at $112.00 per share.
Ultimately if price fails to support here – meaning it breaks under $112’s support – then we likely see a continuation of the pullback toward the $108.00 confluence level.
Simpler terms – a break under $112’s Daily Support likely triggers a weekly retracemet back toward $108.00.
Use this logic into whatever other strategies or indicators you’re using to plan trades in Facebook (FB).
This article is brought to you courtesy of Corey Rosenbloom from Afraid to Trade.