The charts of eBay, Inc. (EBAY) have bottomed out the past four months. Prices could trade sideways in the near-term but further strength is expected in the next two months or so. In addition to stronger looking charts, Ebay was upgraded to "Buy" by our quantitative service.
Let's check out the charts and indicators to see if there is a good risk/reward position if we approach the long side of this name mentioned by Jim Cramer today on Real Money.
In the daily bar chart of EBAY, below, we can see that prices have been testing the bottoming 200-day moving average line. EBAY gapped higher earlier this month and prices have not declined to fill even half of the gap or price void. I consider that a sign of strength in that buyers of EBAY are paying up to get long or increase their longs. A pullback to fill the gap would tell me that traders are more willing to take profits on unexpected strength.
The slope of the shorter 50-day moving average line has been positive all month. We can see a volume surge when prices gapped up and the daily On-Balance-Volume (OBV) line has been rising robustly since late December and tells me that buyers of EBAY have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in early January for an outright buy signal.
In the weekly bar chart of EBAY, below, we can see a number of positive signals. Prices have closed back above the declining 40-week moving average line. The volume of trading the past four months has been stronger than the prior two years and suggests a return of buyers.
The weekly OBV line shows a decline from around the middle of 2017 to this past December. A strong move up in the OBV line from the middle of December promises to be the start of a fresh move higher.
The weekly MACD oscillator crossed to the upside in December for a cover shorts buy signal. Crossing the zero line in the weeks ahead would be an outright buy signal when it happens.
In this Point and Figure chart of EBAY, below, we can see a turnaround on this chart. A base pattern is visible with and upside price target of $38.11. A trade at $34.96 will refresh the uptrend.
Bottom-line strategy: Traders can go long EBAY around the $34 area risking to $30 looking for gains to the $38-$40 area and perhaps higher.