PayPal Holdings, Inc (NASDAQ: PYPL) plummeted over 7% on Oct. 20 when it was announced the company was considering the purchase of Pinterest, Inc (NYSE: PINS) for $39 billion, or $70 per share – a premium considering Pinterest had closed the previous day’s session at just $55.88. PayPal later stated it was not pursuing an acquisition of Pinterest at this time.
PayPal continued to fall an additional 13% lower until the stock hit a bottom at the $225 level on Wednesday. PayPal then retested the level as support on Thursday and bounced.
The back test of the $225 level has potentially created a bullish double bottom pattern on the daily chart.
On Friday, PayPal looked to be printing a bearish Marubozu candlestick, which could indicate lower prices may come on Monday if the stock closes the trading session near its low-of-day.
PayPal’s relative strength index (RSI) has been near or below the 30% level since Oct. 20. When a stock’s RSI reaches or exceeds the 30% level it becomes oversold, which can be a buy signal for technical traders.
PayPal is set to print its third-quarter earnings after the closing bell on Monday. Holding stock or options through earnings is risky because there can be a bullish reaction to an earnings miss or a bearish reaction to a beat.
PayPal has resistance above at $232.63 and $237.80 and support below at $225 and $218.72.
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You Ask, We Analyze: Why PayPal's Beaten-Down Stock Must Hold This Key Level
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