Reading the Right Chart

 | Nov 11, 2013 | 9:00 AM EST  | Comments
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Stock quotes in this article:

ebay

 When there is not enough information via a daily chart of a particular stock, I back it up and look at a weekly, hoping for some clarification. In the case of eBay (EBAY), the weekly chart actually provides a rather bullish scenario, with the risk defined, of course!!

 One of the first things that I noticed in the weekly chart was the price symmetry (similarity) of the most recent decline with a couple of prior declines. Note that the decline into late August of this year was $8.42. This is very similar to a prior major decline of $8.49 and not too far away from another that lasted $9.31. The bottom line is that the bigger picture pattern on the weekly chart is bullish, even though the daily chart has looked a bit "iffy" recently.

With the key support that is illustrated on the weekly chart being tested and held, along with some similar levels on the daily chart, I'm starting to see some buy triggers in this one. I am interested in the buy side as long as price continues to hold above this key support. The daily zone came in at $49.89 to 50.43. The weekly zone came in at $48.07 to $49.55 and also at $50.02-32.

If price continues to hold above the most recent lows in this stock, I have an upside Target 1 to shoot for at the $60.33 area via the weekly chart. Target 2 comes in at 63.24.  If you use the recent swing on the daily chart, however, the targets come in a bit lower starting at $58.71. Options are relatively cheap on this one, if you want to go that route.

If you take a peek at the daily chart, you also will see that there was a coincidence of at least three Fibonacci timing cycles at this low. This timing work also supports a bullish scenario.

I will consider myself wrong the trade if this major weekly price cluster of support is violated. Unless that occurs, I'm going to trade it for higher prices in the coming sessions.

 

EBAY Weekly
dynamic Trader

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