PayPal Holdings, Inc PYPL gapped up over 4% on Thursday in tandem with the general market, which was saw the S&P 500 surging about 1%, boosted by a positive reaction to Meta Platform’s fourth-quarter earnings print.
The gap-up open caused PayPal to regain the 200-day simple moving average (SMA) as support without having to battle the area during regular trading hours.
The 200-day SMA is an important bellwether. Technical traders and investors consider a stock trading above the level on the daily chart to be in a bull cycle, whereas a stock trading under the 200-day SMA is considered to be in a bear cycle.
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The 50-day SMA also plays an important role in technical analysis, especially when paired with the 200-day. When the 50-day SMA crosses below the 200-day SMA, a death cross occurs whereas when the 50-day SMA crosses above the 200-day, a bullish golden cross takes place.
The PayPal Chart: On Wednesday, PayPal attempted to regain the 200-day SMA as support but closed just under the area. Now that PayPal has regained the 200-day as support, the stock is likely to consolidate above the area for a period of time.
- If that consolidation begins to take place over the next few days, PayPal may settle into a handle formation of a larger cup-and-handle pattern. If that happens, the measured move is about 26%, which suggests PayPal could surge up over the $100 mark.
- PayPal is trading in a strong and consistent uptrend, making a series of higher highs and higher lows. PayPal’s most recent higher low was formed on Monday at $79.54 and the most recent higher high was printed at the $82.53 mark the day prior. If PayPal begins to consolidate over the next few days, Thursday’s high-of-day may become the next higher high within the uptrend.
- Unless PayPal surges significantly higher later on Thursday to print a big bullish Marubozu or kicker candlestick, the stock is likely to print a bearish doji, shooting star or hanging man candlestick, which could indicate lower prices will come on Friday. If PayPal begins to trend lower, bullish traders will want to see it take place on decreasing volume.
- PayPal has resistance above at $86.81 and $94.50 and support below at $86.81 and $82.07.
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