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Cup and Handle Breakout in Facebook

After a disastrous IPO, Facebook shares have been in a volatile trading range between 26 and 33. During this time, the stock has formed a cup and handle bottom-- and if the breakout is confirmed may put the bulls back on much better footing.

The main level to watch is a hair above 33. This level has been resistance a few times and is the level that marks the first stabilization after the strong IPO selloff.

The measured move on this cup and handle is about 7 points, so that puts a target of $40 on the stock. That price may be a bit ambitious, but if the buyers can retake the 33 level as earnings anticipation ramps up, there could be some solid momentum into the high 30's.

by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/