Zynga (ZNGA) has staged a decent rally in percentage terms from its February low. Volume and the On-Balance-Volume line confirm this markup phase, but price momentum has slowed this summer, so longs should look to protect their profits.
In this daily chart of ZNGA, we can see both the relatively quick selloff of shares in January and February and the fairly rapid turnaround to the upside. The volume has been coming in spurts, but when you use the math to create the On-Balance-Volume (OBV) line, you can see it rise steadily with prices. Prices are above, but testing, the rising 50-day moving average line and above the rising 200-day line.
The one warning sign we do not want to ignore is price momentum. Prices make a high in July and then an equal high in September. The 12-day momentum study makes a lower high in September. Though the prices look about the same, the second rally was weaker. A break or close below $2.60 would break the pattern of higher lows and higher highs. Longs should not overstay their welcome at that point.
In this weekly chart of ZNGA, above, we can see prices have traded sideways for about two years. Prices are above the slightly rising 40-week moving average line. The weekly OBV line has an upward slope. The MACD oscillator is above zero but poised for a new sell signal. ZNGA could surprise with a weekly close above $3, which would be a breakout, but a downward reaction is likely first.