Using a mix of technical indicators as well as non-technical indicators can help market participants get an edge in the markets. In this particular case study, we go over the daily chart looking back since October of 2021. This case study focuses on the full picture including technicals, seasonality, and analyst estimates to gauge sentiment.
Daily Chart
This is a daily chart of PYPL since October of 2021 after the price of PayPal dropped significantly into the end of the year. This chart focuses on finding technical levels for the upside and downside in order to get an idea of where prices may go and ways to find target prices. The case study also touches on non-technical tools such as analyst estimates and seasonality to get the full picture.
- This number shows the anchor points for both the VWAP and volume by price. The first anchor point from October shows where the original VWAP starts as well as the volume by price. The second anchor point is the earnings gap down in November 2021. These anchor points are areas on the chart where the “status quo” changed from a technical perspective but also a news perspective with the earnings gap down. As you can see, anchored VWAP for the earnings gap down has been an important level to breakthrough.
- This number shows the “volume shelf” which is an area on the chart which shows a large number of shares aggregating at a specific price zone. In this case, you can see the stock price of PayPal respecting this area as it becomes a “launchpad” for the price to move up off of if it can break and close above the VWAP from the earnings gap down.
- This number shows the gap above from the earnings gap down in early November. This huge gap is highlighted using the “gap snake” on the TrendSpider platform and is likely a target for bulls if the price can get through both anchored VWAPs above. Traders can use this automated gap detection to set alerts when the gap starts to fill and/or has fully filled.
- This number shows the seasonality of PayPal since the IPO. As you can see, January has a very strong win rate with an 86% win rate if you include the current price action so far this January which would make it a positive month. This “86% win rate” means that 86% of the time, January monthly close is higher than the December monthly close. This strong seasonal win rate with the strong technical setup with the volume shelf suggests January could be a very strong month for PayPal.
- This number shows the analyst estimates for PayPal. As you can see, there are 50 analyst “buy” ratings, 2 “hold” ratings, and 2 “sell” ratings. These numbers suggest that analysts are overwhelmingly bullish on the stock which also aligns with the strong technical setup and seasonality into January 2022.
We hope that this case study helps to show how striking a good balance between “clean” charting and a few useful indicators can help you to improve your overall trading performance by providing more insight into price direction and trend than price alone can offer.
