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Fan Yang

PayPal Holdings Inc. (PYPL) Continues to Show Topping Price Action

Paypal $PYPL has been bullish since the start of the year. However, after cracking the $120 level in July, price retreated in August. Based on price action, we should probably anticipate more bearish correction ahead.

PYPL Daily Chart

(click to enlarge)

Head & Shoulders:
- During the 9/9 session, price fells sharply and engulfed about 2 weeks of consolidation price action. This bearish engulfing price action itself signals a bearish outlook.
- On top of that, the dip appears to be developing a shoulder within a tilted head and shoulders pattern.
- Furthermore, the RSI held under 60. This reflects maintenance of the prevailing bearish momentum.
Neckline and 200-day Simple Moving Average (SMA):
- As we can see on the daily chart, price is still above the 200-day SMA.
- I would treat this area around $102as the neckline.
- A break below 102 clears the 200-day SMA, the projected neckline, and the previous August-low.
- This would open up at least the $93.5-$94 area, which was a previous resistance area that might be challenged as support.
- If this correction occurs, a bit more extension can bring price down to the $89-$90 area and still be within the long-term bullish outlook for PYPL. 

PYPL Weekly Chart

(click to enlarge)

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