eBay (EBAY) is a name that was in a trend channel but broke out of it at the start of September, when it started consolidating sideways. But here too, there's a technical price setup that points to more upside. For eBay, it's an inverse head and shoulders pattern.
The inverse head and shoulders is probably one of the best-known patterns among would-be traders because of its name and unique appearance. It's formed by three swing lows in a stock's price chart. The outside two, the shoulders, come in at approximately the same level, and they're separated by the head, a lower trough in the pattern. The buy signal comes when the neckline gets broken. eBay's neckline comes in right under $51.
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