Last Wednesday, I began to see signs that Facebook Inc. (NASDAQ:FB – 21.99) could be bottoming in the near term. Miracles do happen from time to time, and since then the stock is up over 15% in about a week and a half. This move has obviously been helped by the broader-market move and yesterday’s QE3 announcement, but I continue to see broad skepticism amid the rally, which indicates that some consolidation and then another move higher could be in order.
What is particularly interesting is the pattern that is forming on a daily chart. The pattern that would be formed by such price action is called an inverse head-and-shoulders formation. Opposite of the bearish head-and-shoulders formation, an inverse head and shoulders is a bottoming pattern that will often signal a trend reversal.