The payments facilitating firm PayPal (PYPL) has been in a decline since July and the selloff does not appear to be over just yet. Let's check out the charts again.
In our March 25 review of PYPL, we wrote that "It feels like the worst is behind us on PYPL but it does not feel like we will have more than a bounce. Nimble traders may approach but I would prefer to see more accumulation (buying) and evidence of basing before reaching for a buy ticket."
In this daily bar chart of PYPL, below, we can see that PYPL remains in a downtrend and trades below the declining 50-day moving average line. The slope of the 200-day moving average line is also negative. The On-Balance-Volume (OBV) line shows weakness from October. The 12-day price momentum study shows a low in February and the higher low in April telling us that the pace of the decline is slowing down. This is a bullish divergence, but not yet a significant one.
In this weekly Japanese candlestick chart of PYPL, below, we continue to see a bearish picture. Prices are in a longer-term decline below the bearish 40-week moving average line. The weekly candles are mostly red (bearish) and there are no lower shadows. The weekly on balance volume line is a decline and the Moving Average Convergence Divergence (MACD) oscillator oscillator is bearish.
In this daily Point and Figure chart of PYPL, below, we can see a $43 price target.
In this second Point and Figure chart of PYPL, below, we used weekly price data. Here the charting software also displays a $43 price target.
Bottom line strategy: Like the broader market, PYPL always runs the risk of a short covering bounce, but the longer-term trend is still negative. Continue to avoid the long side.
