PayPal (PYPL) stock has suffered a serious decline since July. The shares have shown a little stability in late February and early March and a Real Money subscriber asked us whether the worst is behind us.
Let's check the charts and indicators.
In this daily bar chart of PYPL, below, we can see how the shares were crushed month after month. A big downside price gap on very heavy volume was not enough to wash out traders and prices sank still further. Prices made a low in late February and a retest of the low in early March.
The On-Balance-Volume (OBV) line made a low in late February and now shows a little improvement as buyers show a little aggressiveness. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside in late February for a cover shorts buy signal. Now the oscillator is just below the zero line and could soon cross above it for an outright buy signal.
In the weekly Japanese candlestick chart of PYPL, below, we can see some recent price and indicator improvement. The shares have made a bottom reversal pattern at the end of February and early March. This reversal could signal a sideways move or a rally. Hard to tell at this point in time. Prices are extended (oversold) when compared to the declining 40-week moving average line.
The weekly OBV line looks like it is done with its bearish move lower. The MACD oscillator has narrowed and is close to a cover shorts buy signal.
In this daily Point and Figure chart of PYPL, below, we can see a potential upside price target of $162. Maybe, but I do not see enough of a base to suggest that as a price target.
In this weekly Point and Figure chart of PYPL, below, we see a $171 price objective.
Bottom-line strategy: 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.
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