Facebook Shares Blow Through Resistance Level After Earnings

Shares of Facebook, Inc. FB are trading higher after a blowout earnings report.

However, there was bullish action in the stock over the past two weeks. Some savvy traders may have anticipated this move.

What To Know: When stocks are in rally mode, levels that had previously been resistance turn into support levels. This sets the stage for another move higher.

That is the case with Facebook and the $300 level. It was resistance in August and now it's support. This conversion happens because of seller's remorse.

See Also: Facebook Surges To New Highs As Q1 Revenue Jumps 48%: What Investors Should Know

Investors who sold Facebook at $300 thought they made a good decision when the stock moved lower. But in early April, shares smashed through this level and moved higher. This causes many of these investors to think they made a mistake.

A number of them decide to buy their stock back, but they will only do so if they can get it for the same price they sold it at. As a result, they will place their buy orders at their selling price. In this case, it's $300.

If there are enough of these buy orders, the level will convert from resistance to support. This is a bullish development for a stock, and it happened with Facebook at $300.

See also: How To Buy Facebook Stock