Technical Analysis and Market Entry: eBay (EBAY)

  • eBay (EBAY) shares are currently moving within consolidation mode, ahead of a further potential committed move north.
  • The company’s quarterly earnings are due for release on Tuesday 23rd April, after the closing bell.

Shares of eBay (EBAY) have been cooling for the past two weeks, after what was a decent bull run higher. Prior to the recent cooling, eBay had been on a consecutive four-week move to the north, gaining some 7%. 2019 so far has proven to be strong for the bulls, maintaining consistency in their path to recovery.

Road to Recovery

eBay weekly share price chart.

The price has gained a chunky 40% from the beginning of 2019, as it looks to regain the beating encountered through 2018. Back in January 2018, eBay was trading up at the heights of $47.00, which was the stock’s all-time high. It dropped over 40% down to the low of 2018 at $26.00, which was the weakest the price had been since July 2016.

The considerable price cooling isn’t too surprising, as many participants may have just been cashing in on their profits. In terms of the profit-taking, it is very likely to have sparked a chain of investors to follow suit and close out of their longs. The move south was steep, as a result of this behavior price action formed a descending channel formation.

Bulls have taken it down a notch from the upside pressure since the high print in February up at $38. The noted level was the highest the price had been since June 2018 but had run into an area of supply. The zone of sellers can be seen tracking from the $37-$39 price range, a known area to cause some difficulty for the bulls. Since the February high, eBay has been very much within consolidation mode, ahead of next committed direction.

Earnings Report – 23rd April

On Tuesday 23rd April, after the closing bell, the online marketplace platform giant is due to report its quarterly earnings. Analysts are anticipating for eBay to report earnings of 63 cents per share on revenues of $2.58 billion. The company is poised to report another excellent quarter, helped by the further influx of active buyers. eBay’s Marketplace active buyers have reportedly increased some 5.3% from the year-ago period to 179 million.

The company has also accelerated its artificial intelligence (AI) efforts through personalization, image search technology and customer support, which are expected to strengthen the Marketplace platform.

Trade Recommendation

Given that the price is trading within a known area of demand, a long position is attractive from here. Anywhere between the buying range of $34-$35 is somewhat appealing. To the upside, eyes first will be on retesting the current 2019 high up at $39. Further to the north, a retest of the all-time-high up at $47 is the next target.

Should the upcoming earnings report prove to be fundamentally supportive for the stock, then holding a buy position for further moves could be worth doing. In terms of stops on the buys, these are to be placed just below the noted demand zone, leaving enough breathing room at $32.50.

Featured image courtesy of Shutterstock.

 

Tags:
Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.