Yelp Inc. (YELP) shares jumped more than 18% after hours on Thursday after the company reported better-than-expected second quarter financial results. In addition to a strong quarter, the company announced that it would sell its Eat24 business to GrubHub Inc. (GRUB) for $287.5 million in cash and enter a five-year partnership with GrubHub for online takeout and delivery. These two catalysts should send the stock higher during Friday's session.

Yelp's second quarter revenue jumped 20.4% to $208.86 million – edging out consensus estimates by about $4 million – while net income of 25 cents per share blew past consensus by 28 cents per share. The company also announced a new $200 million share repurchase program that could provide upward pressure on the stock price over time. Non-financial metrics like reviews and app installs also moved sharply higher during the quarter. (See also: What's in the Offing for Yelp This Earnings Season?)

Technical chart showing the performance of Yelp Inc. (YELP) stock

From a technical perspective, the stock broke out from its price channel dating back to mid-May and closed a large gap lower that was due to poor first quarter financial results. The relative strength index (RSI) closed Thursday at a neutral 47.70, while the moving average convergence divergence (MACD) appeared on the verge of a bearish crossover until the earnings surprise. Traders should maintain a bullish bias on the stock over the short and medium term.

Traders should watch for an open above the upper channel trendline near R1 resistance of $34.13 and a potential move higher to close the gap and reach reaction highs near R2 resistance at $35.74. If the stock closes below the upper channel trendline, traders could see a move lower to retest the lower trendline near the 50-day moving average at $30.57. (For more, check out: Google Is Eating Yelp's Lunch.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.