bwli91
Short

ZNGA to $6.00

NASDAQ:ZNGA   ZYNGA INC
Classic ascending wedge is a big bearish sign. Note that on MACD and RSI the lower highs with each price high. I am expecting a drop to around the $6.00 mark before the year ends.
Comment: Also note the decrease in volume as the ascending wedge continues to each its pinnacle. Looking for the price to drop below the lower ascending wedge trend line.

My current position is 12/20/19 $6.00 Puts.
Comment: Price is currently flirting with the lower trend line of the ascending wedge.

I expect there to be quite some support at the lower Bollinger Band limit of $6.25-$6.26. There are three scenarios from here:

1a. ZNGA finds support at the $6.25-$6.26 level and will bounce.
1b. ZNGA breaks through middle Bollinger Band and continues to the upper Bollinger Band.
NOTE: I will close my position if it breaks above the middle Bollinger Band.

2a. ZNGA finds support at the $6.25-$6.26 level and will bounce.
2b. ZNGA rises to middle Bollinger Band with big resistance and continues to head downwards after the attempt towards the $6.00 range.

3a. ZNGA blows past the support at the $6.25-$6.26 level, where I believe it will head towards the $6.00 range.

Be careful of a false bear flag. Tread lightly with this.
Comment: After-hours show some downwards pressure towards my suggested support of $6.25-$6.26. As we know AH with low volume doesn't tell us much, but it is something to think about.

I will give a status update once the weekend is over.
Comment: This morning, price touched $6.20. Looks like the $6.25-$6.26 support has become a resistance line, as ZNGA is having trouble pushing above it. If the price can break down through $6.20 again, it will reinforce my bearish outlook. I will give another update towards the end of the day.
Comment: ZNGA broke past the middle Bollinger Band on the 4HR and finding the bottom Bollinger Band limit. Currently the price is following my #2 scenario where the price may rebound back to the middle Bollinger Band after bouncing from the bottom. This is where I am hoping it will find large resistance and will continue towards the $6.00 mark.

I will close my position if the price breaks above the middle Bollinger Band with confidence and volume (~$6.30).
Trade active: Price saw a strong resistance at $6.30 (middle Bollinger Band), which resulted in the price bouncing downwards from it. It will be interesting to see what happens the rest of the week. I consider this trade active and will update you guys accordingly.

Good luck all!

Comments

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