Pro: 3 Technical Charts Traders Should Watch
Trading expert Serge Berger commented Tuesday on three charts he was watching.
For Weatherford International Plc (NYSE: WFT), Berger noted that on the long-term weekly chart, "we see that WFT stock has exhibited plenty of volatility over the years, but also has a well-defined area of support (blue box) around the $8-$9.50 area."
Berger also noted that the "January lows in the stock came on oversold levels, as measured by the Relative Strength Index (RSI), not seen since late 2008 just as the stock bumped into the blue support line."
Weatherford may be poised for a bounce, according to Berger, if viewed through "a longer-term lens."
"On the daily chart, we see that while WFT stock didn't bottom until January, the RSI indicator bottomed in December and thus flashed notable positive divergence from price — a positive sign," according to the trader.
Berger added that the "stock then worked itself higher, and in early March bumped into the 100-day simple moving average (blue line). By mid-March, WFT stock found support at its 50-day moving average for the first time since last summer. The rally in the second half of last week subsequently pushed WFT above its 100-day MA for the first time since February of 2014."
With a bullish inverse head-and-shoulders pattern having formed since January, the stock could move higher, Berger observed.
The trader suggested that "active and tactical traders and investors could look to buy WFT stock on a push above last Thursday's highs around $13.15 with a price target around $15.30, which would also fill the down-gap from last November."
Weatherford International closed at $13.56, down 1.67 percent.
The iShares Russell 2000 Index (ETF) (NYSE: IWM) was another chart Berger was watching.
The trader said that the Russell was less affected by the movements in the USD and the price action continued to reflect that year-to-date.
"Look at the relative strength in the IWM vs the SPY. I expect that to continue, although not necessarily day over day but more so week over week or month over month," according to Berger.
iShares Russell 2000 Index closed at $124.40, down 0.64 percent.
Finally, American Eagle Outfitters (NYSE: AEO) was also being watched.
Berger said the stock was "looking very giddy to break past near and longer-term resistance" and he remained "bullish on consumer discretionary stocks and retailers."
American Eagle Outfitters closed at $17.09, down 0.98 percent.
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