Short-Term Buy Opportunity on PayPal Shares?

Short-Term Buy Opportunity on PayPal Shares?

Short-Term Buy Opportunity on PayPal Shares?

PayPal shares are in the middle of a short-term climb, moving above a rising trend line connecting the latest lows of price action since October. Price is currently making a move to test the trend line at the $35.50-35.70/share area, where a lot of buy orders might be located.

This potential trend line support lines up with an area of interest, which has served as a resistance level in the past. It is also within the vicinity of the dynamic support at the 100 SMA. This short-term SMA is above the 200 SMA, which shows that the path of least resistance is to the upside.

Stochastic is already on the move up, indicating that buyers are taking control of price action and could be strong enough to push for a climb to the previous highs near $38/share and beyond. RSI is edging close to the oversold zone, also suggesting that bullish momentum could build up, with a shallow bullish divergence about to form.

PayPal Shares Outlook

PayPal shares have been rated as a buy by most analysts, as the stock has enjoyed a positive outlook following the split from eBay earlier in the year. In addition, the company’s earnings report has been pretty impressive, as PayPal added a healthy 16 million active accounts over the summer, boosting its overall user base and transaction volumes 10% year over year.

Aside from that, Nasdaq’s welcoming for PayPal shares in its 100 index also spelled positive prospects. It will become a a component of the NASDAQ-100 Index® (Nasdaq:NDX) and the NASDAQ-100 Equal Weighted Index (Nasdaq:NDXE) prior to market open on Wednesday, November 11, 2015, replacing Broadcom Corporation.

PayPal is facing some challenges in the online payments industry from cryptocurrencies but the company’s security features and ease of use continue to keep it at the forefront. As reported by NewsOracle, Zacks Investment Research showed that 16 analysts rated PayPal shares as a strong buy while only 1 has given a sell rating.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.