PayPal Holdings, Inc. is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. PayPal operates a two-sided network that links its customers around the globe to facilitate the processing of payment transactions. The Company allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. It enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products. The Company also offers consumers person-to-person (P2P) payment solutions through its PayPal Website and mobile application, Venmo and Xoom.
- The 30 minute chart which represents a short term trading platform is presented with a 2 trend option. (note: using the 30 minute will allow traders to view the short term nuances of the stocks price relative to supply / demand levels).
- First is the down-trending channel which began after the pennant break at 256
- Second is the price to trend correlation as the initial part of the channel trend correlates to the lower division (250/239.5) we see that as price traded along the lower channel trend line we see a gap up into the channel highs (255.5)
- This technical gap and resumption of trade has remained throughout the rest of the pattern with the price heavily concentrated at the top of the channel trend.
- Recently as the price moves into our daily demand range (233.5/223) we see no heavy correlationary signals in either volume, MACD(i), ATR(i), or RSI(i).
- When observing charts on any time frame it is important to asses the SMA or (simple moving averages)
On the above chart we have:
- 8d(i)SMA (light blue line which tracks right along with price, above = short term strength, below = short term weakness. Price for PYPL continues to trade below the 8d(i)SMA which confirms ongoing bearish trading on the short term.
- Next is the 21d(i)SMA (yellow line closely near the 8d(i)SMA). When price breaks through that level it is often correlated to a trend reversal.
- The next three SMAs (50/Purple. 100/Green. 200/blue) represent larger trend confirmation/rejection moving averages.
- Often when a trend is broken by the 21d(i) it will confirm or reject the next closest technical moving average.
Overall PayPal is technically well set up to rally post-earnings, with price now trading in the larger demand range, traders should expect a higher probability the price begins to resume the positive trend.
8/21/50/100/200dSMA: The Simple Moving Average is calculated by summing the closing prices of the security for a period of time and then dividing this total by the number of time periods. Sometimes called an arithmetic moving average, the SMA is basically the average stock price over time. As a trend develops, the moving average will slope in the direction of the trend, showing the trend direction and some indication of its strength based on the slope steepness.
Pennant Pattern: The Pennant is a relatively rapid formation that appears as a small wedge after a steep trend, which develops in the opposite direction: after an uptrend, it has a downward slope and after a downtrend, an upward slope. The preceding trend is crucial for the pattern formation and is often called a Pennant pole. The question of the slope of the preceding trend is somewhat controversial: some prefer it very steep, almost straight, while others find those with a slope of 45 degrees the most desirable. The wedge that develops in the Pennant is relatively small, thus price action in it is almost immediate compared to other patterns: it usually takes several days to couple weeks for the Pennant to be completed.
ART: The Average True Range (ATR) study calculates the average true price range over a time period. True range is the greatest of the following:
The difference between the current high and current low
The difference between current high and previous low
The difference between the previous close and the current low
MACD: MACD (Moving Average Convergence/Divergence) is an oscillator study that is widely used for assessment of trending characteristics of a security. Calculated as the difference between two price averages, this indicator also provides a signal line, an average of that difference. Crossovers of the MACD plot and the signal line often produce valuable signals for trend analysis.
RSI: The Relative Strength Index (RSI) is an oscillator that rates the strength of a security on a scale from 0 to 100, comparing magnitudes of its recent gains and losses. By default, Wilder’s moving average is used in the calculation of RSI, however, you are free to select a different type of average in the input parameters.
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