Why Did Facebook’s Stock FAIL at $28 Today?

If you are in the weeds, you can’t see Facebook’s (NASDAQ:FB) forest from the trees.

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This morning, shares of Facebook spiked up to ~28, then quickly failed hard. Why, oh, why? In case you didn’t zoom out before making a trade, the stock is now bumping up against its 10-day simple moving average of $27.93.

If you had the chart above on your work station screen, then the intra-day chart below would’ve made much more sense:

Not only that, but if you were very smart, you could’ve set up a trade to short Facebook at the 10-day simple moving average with a stop loss allowing for a short push past $27.93. In fact, the trade worked out well for some savvy traders.

In the days ahead, start to monitor the major moving averages for Facebook. The stock has started to accumulate enough trading days, and without a firm agreement on fundamental valuation, technical analysis will play a large role in the stock’s short term movements.

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