NEW YORK (TheStreet) -- Facebook (FB) stock has been drifting lower since its huge downside reversal back on April 23. Eight weeks later, the stock is trading right in the middle of its 2015 range and appears directionless. A dip back down to key near-term support may be ahead before Facebook can return to rally mode. The $78 to $76.80 marks a very solid zone of support for the stock.
This zone includes the stock's March low at $77.25. Facebook stock mounted a furious rally off this level, one that carried it to new all time highs two weeks later. Last month this level, along with the 200 day moving average, was put through a strenuous test but it managed to hold once again. If the stock continues its light volume action while drifting back down to the area near its 200 day moving average, a very low risk buying opportunity will develop.
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On the upside, the $83 area is key. Once into new high territory for the month of June, FB will be set up well for a re-test of its all-time highs. After reaching new highs in late March the stock faded, churned for a few weeks, then mounted a new rally a month later. This attempt ended with a very damaging downside reversal on April 23 following the company's mixed earnings report.
Facebook stock has been trading under the heavy weight of the April 23 downside reversal ever since. Another re-test of support may finally allow the stock to repair the damage.