Ebay shares recently broke below a double top pattern, confirming that a downtrend could take place. Price even gapped down but hit support at $22 before a pullback materialized.
Using the Fib tool on the latest swing high and low shows that Ebay shares are already testing a significant area of interest just below the 38.2% Fib and around the broken support. If this holds as resistance, price could drop back to the previous lows or much lower. Note that the chart pattern is around $6 in height so the resulting drop could be of the same size.
The 100 SMA is below the 200 SMA and is holding as a dynamic resistance level. In addition, the moving averages are edging farther apart so bearish pressure is building up.
Stochastic is on the move down, which means that selling pressure is present. In addition, RSI is pointing down so a selloff is imminent. A break below the $22 lows could lead to a drop until $18.
However, according to a study conducted by Baird analyst Colin Sebastian, Ebay could be poised for stronger growth. Marketplace transactions and found improvement in year-over-year growth in February, albeit back to low single-digits, with the showign slightly improving year-over-year growth in February into the low single-digits from a flat January.
According to Ebay CEO Devin Wenig, the company is prioritizing unique products and requiring sellers to include additional data about their offerings, as well as building more catalogs and enhancing content with images and other relevant information. In particular, it is building better tools for sellers, leveraging transaction data to show sellers which particular products are selling well on the platform.
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