IGV: Another Change (Technical Department)
The current economic landscape reflects a complex interplay of inflationary pressures, monetary policy, and consumer sentiment, all of which have significant implications for the performance of the iShares Expanded Tech-Software Sector ETF (BATS: IGV). Because of the recent relaxation of inflationary pressures and tighter monetary policies, the short-term outlook for IGV looks positive, especially as the technology sector continues to improve in in these environments. However, investors should remain vigilant about an upturn in the long-term inflation outlook, as well as strong consolidation and volatility. This article presents the technical analysis of IGV, using the price method on monthly, monthly and weekly charts, showing movement patterns and expected growth. of the price, it will affect the breaking of the main levels. The article expands the analysis from the previous section to determine the upcoming trends in the IGV market.
Current Economic Environment
The recent drop in the Consumer Price Index (CPI) from its record highs indicates that inflationary pressures will ease in the short term, allowing the Federal Reserve to adopt more accommodative monetary policy. This development is very good for IGV, because the easy financial conditions support growth and innovation in the technology sector. Financial terms reduce the cost of borrowing for businesses. Lower debt costs make it easier for technology companies to access capital for investment in research and development, product innovation, and business expansion. Increased access to finance can promote innovation and growth in the sector. In this context, IGV is well positioned to benefit from positive changes in the economic landscape, which reinforces the positive outlook for the ETF.
However, it is important to consider that the long-term inflation outlook is still rising, and this can lead to periods of consolidation and IGV stress. While the current environment cannot be ignored, investors should be prepared for significant price volatility as the market grapples with a combination of short-term relief and inflationary concerns about long time. Despite these challenges, the overall outlook for IGV remains positive, and investors who can navigate the turbulence will reap rewards in the long term.
The University of Michigan’s Consumer Index rose, jumping above 50 for the first time since the index began to decline following the Covid-19 crisis, holding the effects of the IGV. As consumer sentiment improves, consumer spending on technology products and services will increase, affecting the growth and profitability of companies in the technology sector. As a result, IGV’s turnaround has not been a tailwind, supporting its operations and the ability to attract more investors to the technology sector as the outlook for economic recovery grows stronger. .
Bullish prospects for IGV
In the previous article, the confidence outlook for IGV was explored using technical analysis, where strong support and reversal signals were identified. It was reported that a price break from $280 would likely move the price to $300 to $310. As expected, the price successfully broke through the $280 level and reached $305.63, falling within the aforementioned range. This level is also a strong resistance, which corresponds to the resistance from the neck of the head and shoulders model.
Based on a strong pullback from the trendline support area, the long-term outlook for the IGV can be assessed using the monthly chart below. This chart shows a solid view of the IGV, with the price moving rapidly in a parabolic fashion. Parabolic price increases are often volatile, leading to major corrections along the way. A 47.54% decline in IGV’s price from the 2021 high of $448.75 to the 2022 low of $235.41 is considered normal and indicates a healthy market. The last quarter of 2022 showed a beautiful reversal from support, and the first quarter of 2023 showed a very strong candle, closing at its highest levels. This price action over the past six months shows a strong upward trend, which supports the positive outlook of the market.
To better understand the IGV perspective, the monthly chart below shows key Fibonacci levels in the market. These levels were taken from the November 2008 low of $25.60 to the November 2021 high of $448.75. The chart shows that the price found support at the 50% retracement level and a strong return to break above the 38.2% retracement level. The monthly candle for March 2023 closes above the 38.2% level, indicating a breakout. The April 2023 chip is poised to close above this level, confirming the breakout. In addition, the April 2023 chip appears to be an inside bar, with its price range falling within that of March 2023, suggesting a price reduction in the market. This compression indicates that if the price breaks above the April 2023 highs, it will continue to rise and accelerate to higher levels. The RSI is currently trading at the mid-level of 50, showing resistance at current levels. To strengthen the positive outlook for the IGV, the RSI should start to close above 50.
The next view of the IGV is discussed using the weekly chart, which continues to show consolidation within wide ranges. The chart below shows the bullish channel indicated by the red dotted line, with $235 serving as support for the line, where the IGV price was successful. This bag brought the price up to the neck of the head and shoulders model, somewhere between the $300-$310 range. However, the red neck level is at $315. To confidently consider a bullish breakout targeting higher levels, the IGV price should close above $315.
As mentioned earlier, the price has found support earlier than expected and is now trading at a reversal point that requires a break above $315. The quarterly and monthly charts discussed above show a high price pattern, indicating that the price will break. The current trading range is bounded by the red and blue lines, between $235 and $315. The separation of each level leads to the next movement. Investors may consider buying on a correction in the IGV market, with the 38.2% Fibonacci retracement level as strong support in the market.
As the technical analysis suggests confidence implications for the IGV, a possible recession in 2023 will pose a risk to the IGV market. The ETF may suffer if the broader economy suffers. Generally lower consumer spending, less corporate investment, and tighter financial conditions, all of which negatively impact the technology sector and, therefore, IGV. During economic downturns, consumers often cut back on direct spending, which may decrease demand for technology products and services. This decline could affect the revenues and profitability of companies in the technology sector, which could cause IGV’s value to decline. In addition, recessions force companies to reduce investments in technological infrastructure and software as they seek to cut costs and save money. This decrease in expenses will have an impact on IGV’s operations, as many of its subsidiaries are highly dependent on revenue from sales to other businesses.
Although the technical analysis is currently supporting the price in a strong support zone, it is important to know that if the IGV fails to break above $315 and drops below $235, it is possible by weak pressure in the market to cancel in the short term. Therefore, investors should pay close attention to these key levels to minimize investment risks.
In conclusion, despite the challenges posed by long-term inflation concerns, IGV will benefit from the current economic environment characterized by short-term easing of inflationary pressures, favorable monetary policies and improved consumer sentiment. Technical analysis shows a solid outlook for IGV, supported by strong quarterly candles and a retracement of key Fibonacci levels. A break above $315 is needed to confirm a confidence breakout, and based on the price action seen in the monthly and monthly charts, the IGV move up is significant. . Investors may consider buying the ETF on corrections, if the $235 level remains. A break above $315 could pave the way for higher prices.