Shares of PayPal Holdings, Inc. (NASDAQ:PYPL) are soaring on Tuesday after the company announced earnings. Wall Street loves the results.
But the move higher could soon end. A reversal may even follow. This is why our team of technical analysts and traders has made it our Stock of the Day.
Despite the good news, some traders and investors will look to sell. In the market, there is a buyer and a seller on every trade. What moves a stock is the side that wants it more.
In a market that is moving higher, buyers go to sellers and pay the asking price. This results in an uptrend as the sellers raise their offer prices.
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In a down market, the opposite is true. The sellers go to the buyers and accept their bid prices. This results in a downtrend as the buyers reduce these prices.
PayPal is gapping up. This means the buyers are highly aggressive, and the sellers have increased their offer prices.
There may be resistance, or numerous shares for sale, around the $77.50 level. As you can see on the chart below, this level was resistance in July, and there tends to be resistance at levels that had previously been resistance.
There may be enough supply at this level to meet all buyer demand. This may mean the rally ends around here.
Many of the people who purchased shares of PayPal around $77.50 regretted doing so soon after, when the price dropped. Some of them vowed to get out if they could eventually do so without losing money.
Because of this, these remorseful buyers will be placing sell orders around the $77.50 level. If there is a large amount of these orders, it could create resistance and be a peak again.
‘Sell at former peaks' is an old expression on Wall Street. It may turn out to be good advice with PayPal.
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