Trade of the Week: long NASDAQ 100
The recent correction across major indices has moved the NASDAQ 100 into oversold territory, with the price forming a positive divergence with the stochastic oscillator. IG senior market analyst Shaun Murison reports.
(Video Transcript)
EUR/GBP still a viable trade
Hello and welcome to Trade of the Week. I'm Shaun Murison, senior market analyst at IG South Africa. Recapping on last week's call, my colleague Chris Beauchamp looked at a long position on euro-sterling with a target on the upside of 0.8840, looking at a stop loss of 0.8680.
Now the market has been moving in the right direction. After a brief test, it was getting quite close to a stop loss, but now moving in that right direction, but still far from that target. So that trade is still in play. We're not quite at our stop or at our target just yet.
Tech 100 shows a bullish divergence
Looking at the Trade of the Week for this week, we're looking at the NASDAQ 100 or the US Tech 100, as it's labelled on our platform. This index has recently broken below that 200-day simple moving average (SMA), but to me that's a suggestion that the longer-term uptrend is broken, but it doesn't necessarily assume a new long term downtrend.
At the moment the price is looking oversold, and we do have that bullish divergence marked with the green lines on our chart, so we have the price making lower lows, while the indicator is making higher lows, whilst in oversold period, so we could have a bit of a rebound.
So Trade of the Week is on the NASDAQ or the US Tech 100, with an upside target of $14,565, a suggested stop on a close below the $14,060 level.
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