Block, Inc (NYSE: SQ) and PayPal Holdings, Inc (NASDAQ: PYPL) have both formed weekly chart patterns that could provide clues to their future direction for the trader and long-term investor.
Block printed a possible reversal candlestick while PayPal printed an inner bar pattern. Both stocks have fallen in recent months, with Block trading more than 42% from its all-time high of $ 289.23 on August 5 and PayPal losing 40% of its value since peaking. historic $ 310.16 on July 26.
Both stocks appear to have bottomed this week, but it’s worth noting that events affecting the direction of markets in general, positive or negative reactions to earnings, and headlines on a stock can quickly invalidate trends.
As the saying goes, “the trend is your friend until it isn’t” and any trader in position should have a clear stop in place and manage their risk versus their reward.
Block and PayPal are not only affected by the general markets, which have been volatile recently, but can also sometimes trade in unison with the cryptocurrency industry. Bitcoin and Ethereum have lost around 30% and 20% of their value, respectively, over the past five weeks, which has pushed Block and PayPal even lower due to the trading practices of stocks, which have become more crypto-centric. This year.
See also: How to buy Bitcoin with Paypal right now
In the news: On December 14, Block announced a new Cash App feature that will allow its roughly 40 million active users to offer stocks and cryptocurrencies. In September, PayPal launched a new app that allows its customers to manage all of their finances both encrypted and unencrypted, which includes the ability to send gift cards.
The graphics block: Block is trading in a weekly downtrend, but on Friday it rebounded from near a support level at $ 155.74.
- The rebound from the level, if the stock closes the trading day above the $ 165 mark, will force Block to print a hammer candlestick on the weekly chart. When a hammer candlestick sits at the bottom of a trend, it may indicate that an upward rebound or reversal is in the charts.
- Block’s relative strength index on the weekly chart registers a very low level of 29%. When a stock’s RSI reaches or exceeds the 30% level, it becomes overbought, which can be a buy signal for technical traders.
- The block has above resistance at $ 170.46 and $ 182.24 and below support at $ 155.74 and $ 139.31.
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The PayPal chart: This week, PayPal printed an inner bar pattern in last week’s parent bar.
- PayPal also printed a bullish double bottom pattern on the weekly chart at the $ 179.15 level over the past week and the week prior. If the pattern is recognized, PayPal may break bullish against the inner bar pattern next week.
- Like Block, PayPal’s RSI is in heavily oversold territory at around 27%.
- PayPal has upper resistance at $ 192.67 and $ 201.56 and lower support at $ 183.99 and $ 176.07.