Is Facebook Stock Forming The Dreaded Head-And-Shoulders Pattern?

Stocks don’t go straight up. They typically form a series of price ranges, each one higher than the previous one. When this happens, the resistance level of one range converts into the support of the following range.

This happens because remorseful sellers decide to buy their stocks back after they move higher. This conversion from sellers to buyers turns resistance into support.

When rallies are coming close to the end, this conversion process ends. Resistance levels stop turning into support. This is the first sign that a head-and-shoulders reversal pattern could be forming.

The $330 level was resistance Facebook, Inc. FB and then it became support. The same thing happened with the $337 level.

But the resistance around the $356 level did not and the stock is now trading below it. The head of a head-and-shoulders pattern may have just formed. This means the stock may keep moving lower.

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