Stock of the day: PayPal
18 June 2024
In today's analysis, we turn our focus to PayPal, which has shown strong movement in mid-June, leading to a clear trading signal. Since August 2023, PayPal's price has been constrained within a wedge pattern, delineated by black lines. This wedge, typically a bullish correction in a bearish trend, concluded with a decisive breakout to the downside. This movement is further compounded by a classic head and shoulders pattern, marked in orange, at the wedge's end, adding a significant bearish signal.
The breakout from both the wedge and the neckline of the head and shoulders pattern, highlighted in yellow, underscores a strong bearish sentiment. The price now resides below these critical support levels, marking a definitive sell signal. As long as PayPal's price remains beneath the yellow area and the lower boundary of the wedge, the market sentiment stays negative. Traders should note that this bearish scenario suggests a target towards the lows witnessed in October.
This negative outlook is driven by the combined impact of the wedge and head and shoulders patterns, which both signal further downside potential. Monitoring these levels is crucial for traders looking to capitalize on this movement. If PayPal continues to trade below these resistance points, it could imply sustained bearish pressure, making this a critical juncture for the stock. The potential target is set on the October lows, indicating further room for decline in the current downtrend.