US Tech and FANG stocks testing support after correction
While the US Tech and FANG Indices have pushed to new all-time highs in 2020, a short-term correction sees traders and investors assessing whether this is a buyable opportunity or start of a longer-term market revaluation.
While markets have been digesting the effects of Covid-19 on business and the global economy, The US Tech (Nasdaq) and the US FANG Indices have shown that the appetite for technology stocks remain.
However, while these major benchmark indices have pushed to new all-time highs in 2020, the last two weeks have seen a short-term pullback within the space, with traders and investors now assessing whether this is a buyable opportunity or start of a longer term market correction.
US Tech (Nasdaq100): technical analysis
The price pullback in the US Tech 100 has seen multiple levels of trend line support broken in the near term. The price is now consolidating around the 10890 level. This level marks a major low for the price action of the Nasdaq. At this level we are also seeing an oversold signal by the Stochastic oscillator at this level.
For further downside we are waiting for a close below support at 10890, in which case a move towards the next level of support at 10275 would be targeted.
For a renewed upside scenario, we would prefer to see a price close above resistance of the short term range, currently considered at 11650. A close above this level, supported by a move out of oversold territory on the Stochastic would consider further gains with the recent high 12450, the favoured upside target. In this scenario, a close below the reversal low may be used as a stop loss consideration.
US FANG Index: technical analysis
The price action of the US FANG Index is similar to that of the Nasdaq due to a lessor number but similar make up of its constituent parts. A near term price retracement has seen trend line support broken in the short term. The price is now consolidating around the 4905 level. This level marks major support for the price action of the US FANG Index. At this level we are also seeing the Stochastic oscillator trading more or less in oversold territory.
For further downside we are waiting for a close below support at 4905, in which case a move towards the next level of support at 4415 would be targeted.
For a renewed upside scenario, we would prefer to see a price close above resistance of the short-term range, currently considered at 5325. A close above this level, supported by a sharp move higher for the Stochastic oscillator would consider further gains to come, with the recent high 5840, the favoured upside target. In this scenario, a close below the reversal low may be used as a stop loss consideration.
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