Friday, September 13, 2013

FB FaceBook Weekly and Daily Charts C&H Rising Wedge Overbot Negative Divergence

It is interesting to see the C&H pattern play out that Keystone has highlighted over the last year. Using the breakout line and base intraday numbers, 32.5 and 17.5, targets 47.5, and the closing numbers, 32.0 and 18.0, targets 46.0. Thus, a target zone of 46.0-47.5 and the HOD yesterday was 45.62. So FB is setting up as a short play currently. Any longs are best served to cash in and move on to other stocks. The daily chart shows a rising wedge, overbot conditions and negative divergence, and for nimble traders, a great quickie short opportunity now; price pulled back a bit yesterday starting to feel the effects of the negative set-up. The weekly chart, however, has more upside juice available as shown by the rising RSI, MACD line and money flow. The stochastics and histogram are already rolling over to the downside and will create negativity in FB moving forward. Thus, a VST pull back is likely, say for a few days, but the weekly chart will want to see price come back up, probably to print in the 46.0-47.5 target zone, and then set up with negative divergence to signal the end.

The daily chart shows price on an island since the gap-up in late July. This places a potential island revesal on tap that can cause price to plummet from 34 to 27 in a heartbeat, once price travels lower to 34. The 27-34 gap is big enough to drive Zuck's limousine through so this gap will need filled in the future. Thus, if a day trader or very nimble trader, a short play can be squeezed out for a few days but FB should come back up to set up as a very attractive short from 46-48 say in the week or two ahead. So a short can be established since even if price moves higher, it will only set up a better short. If long, take the money and run. You can get cute and look for the 46.0-47.5 target to ditch the long but this is akin to picking up nickels in front of the bulldozer. If you made a bunch of dough on the C&H breakout, it is likely best to take the money and move on to other opportunities.  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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