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Facebook Stock: Falling Too Far, Too Fast?

ByAndrew Nyquist
Published 09/19/2012, 02:18 AM
Updated 07/09/2023, 06:31 AM

Investing can be a tricky business. Whether Facebook (FB) has hit “bottom” or not is beside the point here. As Facebook was hitting teenage levels, negative sentiment was soaring. And the stock price was falling against it… too far, too fast.

Let’s recap the IPO and post IPO action. After a first day run up, the stock fell from 45 to 25, then rose to 33 and fell again to 17 and change. The latest fall took about 2 months, and dinged “value” as the stock dipped under 19, even if short term in nature. Clearly, this is coming from a Monday morning quarterback perspective, but it’s important to understand what set fire to Facebook stock? This is a good thing for all investors to do — pattern recognition and analysis overview assists us in identifying other investment opportunities.

For starters Facebook’s stock slipped down near, and briefly under, $19.00 per share, the 50% Fibonacci level of its IPO (Initial Offering Price). Additionally, the RSI bottomed when the stock cratered for the first time near 19, then posted a higher low on the RSI when the stock hit a new low.

So what should we watch for here? Well, FB is at initial resistance of 22. Next area is edge of gap fill around 24. Note Gap fill may serve as a magnet. On the support side, watch the lower open gap starting at 20, followed by 19.

Trade safe, trade disciplined.

More Charts here.
 FB CHART
Facebook (FB) stock chart as of September 14, 2012. FB technical support and resistance levels with fibonacci retracements. FB technical analysis post Facebook IPO.

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