Trading Strategies for PayPal Stocks Ahead of Q3 Earnings – PayPal Holdings (NASDAQ:PYPL)

PayPal Holdings, Inc. PYPL is set to print its third quarter financial results after market close on Thursday. Analysts expect the company to report EPS of 96 cents on revenue of $6.82 billion for the quarter ending Sept. 30.

Ahead of the earnings print, Morgan Stanley analyst James Faucette maintained an overweight rating on PayPal and raised the price target by $1 from $134 to $135. The new price target suggests a 75% rise for the stock.

When PayPal printed its second quarter earnings report on August 2, the stock was up 12.82% the next day, but ran into a bunch of sellers that pushed the stock up around 8.5% on the day.

From a technical standpoint, PayPal looks set to rebound due to several bullish signals that have developed on the stock chart. Of course, holding a position in a stock above earnings can be akin to gambling, as stocks can rise after a shortfall and fall after signaling a beat.

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The PayPal chart: PayPal fell to open Thursday’s session, causing the stock to lose support at the lower trendline of a declining channel pattern. PayPal has been trading in a declining channel since August 16, creating a fairly consistent series of lows and lower highs.

  • PayPal’s latest lower high in the downtrend was printed at $91.34 on Oct. 26 and the most recent confirmed low was formed at $80.86 two days prior. PayPal fell below that low on Wednesday and continued its downtrend on Thursday.
  • PayPal was trying to print a hammer candlestick on the daily chart, which could indicate that the next lower low has occurred and the stock will bounce higher on Friday. If this happens, PayPal will regain support within the channel.
  • If PayPal is finally able to break bullishly from the falling channel, it could signal a bigger reversal to the upside in the charts. Otherwise, PayPal may continue to decline in the pattern, finding resistance at the upper trendline.
  • The stock has resistance above at $77.36 and $82.07 and support below at $73.27 and $68.71.

See also: US stocks for another tough day after Fed rate hike as Nasdaq and S&P 500 futures fall – Roku and Qualcomm plunge into earnings disappointment

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