A Technical Look At PayPal Ahead Of Earnings

Excitement has been building over PayPal Holdings’ PYPL first-quarter 2021 earnings report set to be released after the closing bell Wednesday.

This will be the first full quarter that will include results on PayPal's cryptocurrency integration, which was announced on Oct. 21, 2020. PayPal allows customers to buy, sell and hold Bitcoin BTC/USD and Ethereum ETH/USD, as well as a handful of other coins.

Even without a full quarter of cryptocurrency services under its belt, PayPal’s fourth-quarter 2020 results were strong. The company reported revenue of $6.1 billion and earnings per share of $1.08 beating the estimate of $1.00.

PayPal will report its first-quarter earnings amid a downturn in the Nasdaq 100, however, and traders will be watching to see how the stock behaves throughout the day.

The PayPal Chart: PayPal’s stock is trading down almost 20% from the all-time high of $309.25 it made on Feb. 16 and has lost 8% over the past four trading days.

The sell-off into earnings may be attractive to traders because PayPal’s stock could make a big move north if it reports a big earnings beat. On the contrary, when a stock runs up into earnings it often sells off regardless of whether a company reports a beat or a miss.

On Tuesday PayPal lost support at $259.40. PayPal’s stock has also lost support of the eight-day and 21-day exponential moving averages, which is bearish. Tuesday’s price action caused the eight-day and 21-day EMAs to curl down slightly but the eight-day EMA is still trending above the 21-day EMA and if PayPal’s stock reacts positively to its earnings, it could regain the two commonly followed EMAs quite easily.

Bulls want to see big bullish volume come into PayPal's stock Wednesday into earnings or on Thursday after earnings to drive it back up over resistance near $260. If PayPal can regain that level as support, it has room to move towards $274.

Bears want to see a negative reaction to PayPal’s earnings. Sustained bear pressure could push the stock down to support at $243.50. If PayPal was unable to keep that level as support, it could revisit the $230 mark.

PYPL Price Action: PayPal was trading at $250.16.