ZNGA Zynga Weekly and Daily Charts Falling Wedges Oversold Positive Divergence

ZNGA profited from its close connection to FB but living by the sword also leads to dying by the sword.  Once the FB debacle occurred, ZNGA was painted with that same brush, then trader's start to wonder if ZNGA is a one-trick pony.  ZNGA collapses from 16 down to 2. Ouchie. An 88% drop.  The shorts are pressing this stock relentlessly. FB has another lock-up expiring tomorrow which many think will result in some further selling in FB, and corresponding weakness in ZNGA.  FB dropped yesterday only to recover, up 5%, perhaps the shorts are covering ahead of the lock-up since most of the selling in FB appears overdone?  We will find out this week.

But the ZNGA charts caught Keystone's eye.  A speculator plays in the risky arena and one of the things to look for is universal agreement with weekly and daily charts concerning divergences.  If the weekly and daily charts agree with negative divergence the stock will likely drop over 90% of the time, if the charts agree with positive divergence the stock will likely pop over 90% of the time. ZNGA shows textbook falling wedges, oversold conditions that are now being rectified, and most importantly positive divergence across every indicator on both charts. Keystone bot ZNGA yesterday opening up a long position.  Price is on the launch pad right now and the charts say up big.  This flies in the face of what would be expected due to the FB lock-up expiration tomorrow.  As Clint Eastwood says, "Well, punk, do you feel lucky?" If ZNGA bunces that means FB bounces as well.

Price moving above the 20-day MA at 2.30 would be a sure sign that the stock is recovering. Price may favor the 2.0-2.5 sideways channel range moving forward. This would promote development of an inverted H&S that would lead to higher prices moving foward. The 2.50-2.75 gap is interesting since price may move up and jump the gap higher to perform an island reversal, or, simply saunter upwards to fill the gap. The weekly chart shows some large volume dumps where even die-hard holders of ZNGA threw up their arms and said "Get me the H*ll out!"  Thus, this hints of capitulatory action.  Projection is for a bounce to occur up thru 2.20 and 2.30 potentially back to 2.50 in short order, but, as always, this is speculative trading. If Keystone's 80/20 rule occurs, the loss of 2.20 should typically lead to 1.80. If ZNGA drops, Keystone will likely hold and add at 1.70-1.90. 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.