Zynga Inc. ZNGA shares were trading significantly higher Monday after the company announced it will be acquired by Take-Two Interactive Software Inc. TTWO.

Zynga stockholders will receive $3.50 in cash and $6.36 in shares of Take-Two common stock for each share of Zynga common stock outstanding at the closing of the transaction.

Zynga was up 44.92% at $8.70 midday Monday. 

Zynga Daily Chart Analysis

• The stock saw a large gap up after the acquisition announcement and pushed back into a sideways channel in which it once traded. The $11 resistance and the $7.75 support level may start to hold once again.
• The stock crossed above the 50-day moving average (green) but was rejected at the 200-day moving average (blue) Monday, indicating the stock is in a period of consolidation. The 50-day moving average may act as a place of support, while the 200-day moving averages may hold as resistance.
• The Relative Strength Index (RSI) shot higher Monday and now sits at 76 on the indicator. This is well into the overbought range and is showing that many buyers have entered the market since the announcement of the acquisition. If the stock stays overbought it may continue on its upward push.

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What’s Next For Zynga?

The stock saw a huge gap higher after the acquisition announcement and shot back into the channel. This shows the stock may trade in the channel again until the company is acquired. Bulls are looking for some higher lows and for the stock to push higher and break above the $11 level. With some consolidation the stock could continue to push higher. Bears are looking to see the stock start to fade back lower once again and break below the $7.75 level again. If this were to happen the stock may continue to fade lower as it has in the past.