Earnings Play: PayPal

How to play PayPal's 2Q earnings release.

New Highs 1

On Wednesday, after market, PayPal (PYPL) is anticipated to report second quarter EPS of $0.87 compared to $0.72 a year ago on revenue of approximately $5.0B vs. $4.3B last year. The Co operates an online payment firm and its current analyst consensus rating is 37 buys, 8 holds and 1 sell, according to Bloomberg. 

Looking at a daily chart, PayPal's stock price recently dipped below its 20-day moving average which it has been using as support since breaking above it in early-April. The RSI has been fading since price gapped about 9% on May 7th, possibly showing bearish divergence. Even though PayPal's stock price dipped below its rising moving average support line, it is still managing to hold around it. Price seems to be consolidating and forming a symmetrical triangle pattern on a short-term basis after making a record high on July 9th. Price is will likely chop around inside the short-term pattern before breaking to the upside and continuing the uptrend advancing to retest and probably break out from its all time high of $184.00. However, if price falls below the lower trend line of the pattern we could see a bounce at the $164.00 support level. If price breaks the $164.00 support, it may also fall below its 50-day moving average, a bearish signal which could send price back down to its $151.00 support.       

Source: GAIN Capital, TradingView

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