PayPal shares seem to be tired of the climb, forming a reversal signal at the top of its uptrend on the 1-hour time frame. Price created a head and shoulders pattern and is currently testing the neckline, with a downside break likely to confirm that further losses are in the cards.
The 100 SMA appears to be gearing up for a downward crossover, adding more confirmation that a downtrend is underway. However, stochastic is starting to make its way out of the oversold region and possibly indicating a return in buying pressure. Similarly, RSI is starting to head up, also suggesting that price could bounce as well.
Meanwhile, the average directional index is cruising below 50.0 to show ranging market conditions. A move up could show that a trend is picking up while continued sideways movement could keep PayPal shares in range.
PayPal Shares Outlook
PayPal is facing stiff competition from its online payment rivals, as well as mobile payments such as Apple Pay. Reports that the latter is steadily expanding its reach could mean a reduction in PayPal’s user base, especially with tighter restrictions or higher fees.
In the United States, mobile payments comprise more than a third of all e-commerce transactions, indicating an industry shift. PayPal is conducting tests with Venmo, its person-to-person payment platform to turn it into a way to pay for mobile purchases.
Until the company reports significant progress, PayPal shares could face weaker buying pressure, potentially breaking below the head and shoulders neckline at $35/share and dipping to the previous lows at $31.50/share. On the other hand, a bounce off the current support level could spur a move up to the peaks at $38/share.
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