Chart Wars: Why The Bleeding May Be Over For PayPal, Block (Formerly Square) Stocks

Block, Inc SQ and PayPal Holdings, Inc PYPL have both formed weekly chart patterns that could provide clues to their future direction for the long-minded trader and investor.

Block has printed a possible reversal candlestick while PayPal has printed an inside bar pattern. Both stocks have plummeted over recent months with Block trading down over 42% from its Aug. 5 all-time high of $289.23 and PayPal losing 40% of its value since reaching its all-time high of $310.16 on July 26.

Both stocks look as though they may have found a bottom this week but it should be noted that events affecting the direction of the general markets, positive or negative reactions to earnings prints and news headlines about a stock can quickly invalidate patterns.

As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.

Block and PayPal aren't only affected by the general markets, which have been shaky recently but can also trade in unison with the cryptocurrency sector at times. Bitcoin and Ethereum have lost about 30% and 20% of their value, respectively, over the past five weeks, which has pressured Block and PayPal even lower due to the stocks’ business practices, which have become more crypto-focused this year.

See Also: How to Buy Bitcoin with Paypal Right Now

In The News: On Dec. 14, Block announced a new Cash App feature that will allow its roughly 40 million active users to gift stock and cryptocurrencies. In September, PayPal launched a new app that allows its customers to manage all of their crypto and non-crypto finances, which includes the ability to send gift cards.

The Block Chart: Block is trading in a weekly downtrend but on Friday bounced up from near a support level at $155.74.

• The bounce up from the level, if the stock closes the trading day above the $165 mark, will cause Block to print a hammer candlestick on the weekly chart. When a hammer candlestick is found at the bottom of a trend it can indicate a bounce or reversal to the upside is in the cards.
• Block’s relative strength index on the weekly chart is registering in at a very low 29% level. When a stock’s RSI reaches or exceeds the 30% level it becomes overbought, which can be a buy signal for technical traders.
• Block has resistance above at $170.46 and $182.24 and support below at $155.74 and $139.31.

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The PayPal Chart: This week, PayPal printed an inside bar pattern within last week’s mother bar.

• PayPal also printed a bullish double bottom pattern on the weekly chart at the $179.15 level during last week and the week prior to that. If the pattern is recognized, PayPal may break up bullishly from the inside bar pattern next week.
• Like Block, PayPal’s RSI is in heavily oversold territory at about the 27% level.
• PayPal has resistance above at $192.67 and $201.56 and support below at $183.99 and $176.07.