Trade and Fibonacci Level Planning for Facebook FB

Jan 29, 2014: 2:51 PM CST

Facebook (FB) shares are currently “trapped” between a key level and traders may have a key opportunity depending on what happens here.

Let’s take a look at Facebook’s (FB) current chart, note the key levels (targets and entries), and also create a Fibonacci Confluence grid.

FB Facebook Trading Facebook Facebook Stock Technical Analysis Daily Chart Facebook FB

A quick, simplified glance at the Daily Chart reveals that the current $52.50 per share area along with the $55.00 region form the key trade planning strategy levels.

Price is compressed between the 20 and 50 day EMA – one of my favorite patterns – and the implication is that price will break out of the EMA compression soon.

Bears can ‘attack’ (sell short) on a clean break under $52.50 per share which would play a reversal strategy, while bulls/buyers may wait for price to break above $55.00 to trigger the next bullish potential entry.

A clean bearish breakdown here sets up a target play toward the $46.00 per share key confluence target.

Let’s pull all the indicators off the chart and focus on a “Confluence Fibonacci Retracement” Chart:

FB Facebook Fibonacci Grid Fibonacci Confluence Fibonacci Retracement

Using a Confluence (or Cluster) Chart of Fibonacci Retracement levels, we can see two areas highlighted on the chart above.

The first is near $50 per share for a tight confluence and the other is our original $46 per share downside swing target.

Note how price also has held the short-term (near-term) Fibonacci levels I highlighted green ($53.50 and $51.80).

There’s one more quick chart to view and it’s the Weekly Trend Structure:

Facebook FB Facebook Shares Weekly Chart Technical Analysis Trend Facebook Stock Trading Facebook

Price tends to pull-back or retrace to rising weekly moving averages – such as the 20 exponential which is green – and then either bounce-up for a pro-trend retracement (great trading opportunity) or else break under it for an aggressive reversal or breakdown play.

That’s similar to what’s happening at the moment with the recent pullback or counter-trend retracement.

We’ll note that the rising 20 week EMA intersects the $50.00 per share level which could be achieved quickly on a daily chart breakdown under $52.50 per share.

The other factor to notice is the lengthy negative momentum divergence – a similar situation also developed into early 2013 ahead of a flat price period before the mid-2013 impulsive breakout.

Beyond the other trading strategies that you use, continue to focus on the $52.50 and $55.00 per share levels and the potential downside targets into $50.00 then $46.00 which could be achieved on a breakdown event.

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Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning parameters as we watch a “hold and bounce” or “break and retrace” scenario play out in the near future.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “Trade and Fibonacci Level Planning for Facebook FB”

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    […] recently posted about Facebook ahead of earnings – it’s an interesting read from the other side of the earnings gap higher from what was then […]