Shares of eBay Inc (NASDAQ:EBAY) rallied 1.8% last Friday on the back of the company announcing a nearly 50% increase in advertising customers in 2016, as well as a shift in advertising strategy focusing on more direct advertising sales.
EBAY stock has seen significant gains along with the broader stock market since last the U.S. election last November, but has seen a pause in this rally over the past three weeks.
One of the hallmarks of my stock and financial market analysis method is to start by simply gaining perspective.
While perspective can be gained through a plethora of methods such as fundamental analysis, structural analysis and more, I primarily like to start off with a multi-time frame approach.
This analysis, as the name implies, allows me to put in perspective how a stock is behaving in multiple time frames, and discover whether there are any technical intersections of support or resistance, whether it’s in the short-term or the much longer-term.
Then, I overlay this with some relative analysis where I peg the stock (or index) in question against a relevant competitor stock or group of stocks to determine possible relative strength or weakness.
Let’s do this with EBAY stock. I think you’ll like what you see.
EBAY Stock Charts
First off, let’s look at eBay’s multiyear weekly chart.
Here we see that EBAY stock had a multiyear struggle to overcome horizontal resistance, marked by the blue line around the $24-$25 area.
Ultimately, EBAY shares overcame this line of resistance on a more sustainable basis in the second half of 2016, but not until a couple of “breakout fake-out” moves. Such moves, as you know, are common when a stock or index tries to overcome a major multiyear area of technical resistance or support.
The most recent rally in EBAY stock has now pushed it back toward the very upper end of a multiyear uptrending channel, which I marked with the two black parallels.
From this perspective, EBAY looks rather capped in upside potential until a better consolidation phase kicks in.
Moving on to the daily chart, however, we see that EBAY stock gapped higher in late January following its latest quarterly earnings report.
This move kick-started a rally that ultimately pushed the stock above its October 2016 highs in February before pulling back in a controlled fashion in recent weeks.
But note that the pullback in recent weeks merely retested the stock’s highs from last fall (black horizontal), which more or less also coincided with the yellow up-sloping 50-day simple moving average. Last Friday’s (March 18) 1.8% rally started with an up-gap right out of the gate, which broke the stock out of this multiweek consolidation phase that I will label a bull flag pattern.
From here, barring any sharp bearish reversal, EBAY stock looks poised to resume the uptrend and move toward the $35-$36 area over the next few weeks, maybe months.
– Serge Berger
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Source: Investor Place