PAYPAL - 3.6 R:R Simple trading idea
Updated
TLDR: $250 call EX. 1/21/22 or going long Paypal shares @ ~$188, S/L $171.60. 3.6 Risk to reward ratio.
Lately there has been a lot of chatter surrounding Paypal due to being extremely oversold on high time frames. I took a quick look and the very first thing that caught my eye was hidden bullish divergence in the high time frames. Just for fun I thought I'd come up with a very simple weekly trade idea based off of that.
Let's take a look at teh weekly:
Paypal has finally entered oversold on this time frame. That means a bounce is coming soon, potentially even as early as Monday. Looking at price we can also see that Paypal has broken below the $200 zone which was previously strong resistance. From the September 14th low of $176 to where Paypal is now, the RSI is showing a lower low while price is showing a higher low. This is hidden bullish divergence. Therefore, somewhere between $204 and $176 is likely where it will reverse if only temporarily. The next hidden bullish divergence target would be $86 so I find it incredibly difficult to believe it will dump that far.
Let's take a look at the 3d chart:
Directly in the middle of the $204 and $176 zone, we have the 3d 200 moving average at $188.82. This would be a great area to open a/this trade as 200 moving averages are usually extremely strong pivot points.
And now, the simple concept for this entire idea, the daily picture.
It took Paypal 21 bars (29 Days) to drop from the $250 zone to where it is now at $193.61. So a very simple (test) trade concept here would be to just double the time it took to get down this far for it to go back up. Therefore, this trade idea is specifically meant to succeed within 42 bars. (63 Days)
The trade is quite simple. Going long Paypal at ~$188/$190 via shares with a S/L @ 171.6, or buying a $250 call expiring 1/21/22. Current mark price of that call as of Friday's close is $1.38. (Fair warning, due to the 2M/3M time frames, I don't at all see the $250 strike going ITM within 42 days, but I do believe there's profit to be made.)
If worse comes to worst and the $176 zone breaks, the next (way too obvious, IMO) area of confluence is around $145/$150:
Lately there has been a lot of chatter surrounding Paypal due to being extremely oversold on high time frames. I took a quick look and the very first thing that caught my eye was hidden bullish divergence in the high time frames. Just for fun I thought I'd come up with a very simple weekly trade idea based off of that.
Let's take a look at teh weekly:
Paypal has finally entered oversold on this time frame. That means a bounce is coming soon, potentially even as early as Monday. Looking at price we can also see that Paypal has broken below the $200 zone which was previously strong resistance. From the September 14th low of $176 to where Paypal is now, the RSI is showing a lower low while price is showing a higher low. This is hidden bullish divergence. Therefore, somewhere between $204 and $176 is likely where it will reverse if only temporarily. The next hidden bullish divergence target would be $86 so I find it incredibly difficult to believe it will dump that far.
Let's take a look at the 3d chart:
Directly in the middle of the $204 and $176 zone, we have the 3d 200 moving average at $188.82. This would be a great area to open a/this trade as 200 moving averages are usually extremely strong pivot points.
And now, the simple concept for this entire idea, the daily picture.
It took Paypal 21 bars (29 Days) to drop from the $250 zone to where it is now at $193.61. So a very simple (test) trade concept here would be to just double the time it took to get down this far for it to go back up. Therefore, this trade idea is specifically meant to succeed within 42 bars. (63 Days)
The trade is quite simple. Going long Paypal at ~$188/$190 via shares with a S/L @ 171.6, or buying a $250 call expiring 1/21/22. Current mark price of that call as of Friday's close is $1.38. (Fair warning, due to the 2M/3M time frames, I don't at all see the $250 strike going ITM within 42 days, but I do believe there's profit to be made.)
If worse comes to worst and the $176 zone breaks, the next (way too obvious, IMO) area of confluence is around $145/$150:
Note
$184.28. That was the low Paypal hit today. Price still managed to close at $189.48, above the 3d 200 MA:Daily picture also shows a rise in volume with a bearish hammer. The RSI is still showing bullish divergence after breaking below but failing to close below the local low. This is an early indicator of possible reversal:
The $250 call contracts hit a low today of $0.97, and hit a high of what the mark price on Friday was: $1.38.
Those contracts closed today at a mark price of $1.32. I just now decided to look at the open interest and to my surprise, there has been a sharp increase in them since late October:
ibb.co/7RPwpcR
We'll see what happens.
Note
Noteworthy development today. The 4h may have just found support on the last bearish monthly close late last year before that significant rally. The close of that month was $186.13:The 4h chart is showing 2 attempts thus far at closing below it, with the most recent attempt closing almost perfectly above it:
30m chart:
How dope would it be to see a V-shape reversal here? A guy can dream...
Note
Interesting last minute action =o4H RSI showing double bullish divergence at a crucial inflection point:
Note
andddFAIL
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