Etsy Soars Following Blowout Q2 Earnings: How To Play This Trend

Zinger Key Points
  • Etsy beat earnings estimates on both the top and bottom line.
  • The stock is trading in a strong uptrend and may be ready to print its next higher low.
Etsy Soars Following Blowout Q2 Earnings: How To Play This Trend

Etsy, Inc ETSY was surging over 10% higher at one point Thursday after printing a big second-quarter earnings beat.

The handmade and vintage e-commerce platform reported EPS of 51 cents on revenue of $585.14 million. Both numbers topped consensus analyst estimates of 34 cents and $557.25 million, respectively.

Etsy’s revenue increased 10.6% from the same period last year, mostly due to the company raising its sellers fee from 5% to 6.5% in April.

The stock has been heavily beaten down, having plunged 78% from the Nov. 26, 2021 all-time high of $307.75 to reach a 52-week low of $67.01 on June 16.

Despite soaring inflation, interest rate hikes and fear of a looming recession, Etsy appears to have found ways to excel in the environment, and on June 17 the stock reversed course into an uptrend.

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The Etsy Chart: Etsy’s most recent higher high within its uptrend was formed on July 22 at $102.12 and the most recent higher low was printed at the $90.17 mark on July 26. On Thursday when Etsy reached the high-of-day, the stock printed another higher high, which indicates the uptrend is intact.

  • A pullback, to at least form another higher low, is likely to come over the next day or two because Etsy’s relative strength index (RSI) is measuring in at about 67%. When a stock’s RSI nears or reaches the 70% level it becomes overbought, which can be a sell signal for technical traders.
  • If Etsy closes Thursday’s trading session with an upper wick, the stock will print a shooting star candlestick, which could indicate lower prices will come on Friday. The last time Etsy printed a shooting star candlestick on July 22 it signals the temporary high was in and the stock fell 6% over the two days that followed, to print a higher low.
  • Etsy is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The eight-day EMA has been guiding the stock higher since July 18. Bearish traders will want to see that level lost before taking interest in Etsy.
  • Etsy has resistance above at $109.52 and $125.62 and support below at $97.50 and $88.02.

See Also: How to Read Candlestick Charts for Beginners

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