eBay (EBAY) reported their second quarter earnings and Thursday the shares are slightly lower. Traders appear to be reacting to the company's guidance. Let's check out the charts.
In this daily bar chart of EBAY, below, we can see that prices are trading around the rising 50-day moving average line. The slope of the 200-day line is positive too and the line intersects around $59. The On-Balance-Volume (OBV) line has been bullish and rising since November but we are seeing some "rolling over" of the indicator in recent weeks.
The 12-day price momentum study in the lower panel shows a pattern of lower highs in June and July as the pace of the advance slowed.
In this weekly Japanese candlestick chart of EBAY, below, we can see a mixed to potentially bearish picture. At the recent price peak we see what might be considered a harami pattern to mark a high. Prices are testing prior resistance around $65 and the rising 40-week moving average line intersects around $60.
The weekly OBV line shows a long and bullish rise until the past few weeks where the line has been rolling over and suggests a shift from aggressive buying to aggressive selling. The MACD oscillator is crossing to the downside for a take profits sell signal.
In this daily Point and Figure chart of EBAY, below, we can see a potential downside price target in the $57 area.
Bottom line strategy: Traders who might be long EBAY should consider a sell stop at $64. I would avoid the long side of EBAY for now as we could get a better buying opportunity later in the third quarter.
