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As dependence on digital tools and methods of communication continues to rise, many active traders are looking for niche market segments worthy of investment. One such segment that is difficult to ignore is cybersecurity. In this article, we’ll consider several charts used to track the subsector and try to determine how traders will be looking to position themselves over the weeks and months ahead.
iShares Cybersecurity and Tech ETF (IHAK)
Traders looking to gain exposure to a niche segment such as cybersecurity often turn to exchange-traded funds such as the iShares Cybersecurity and Tech ETF (IHAK). As you can see from the chart below, the bounce off of the March lows was strong enough to send the price of the ETF back above the resistance of its 200-day moving average. The surge in momentum has also triggered a bullish crossover between the 50-day and 200-day moving averages, which is a common long-term technical buy sign that is used to mark the beginning of a major uptrend. From a risk-management perspective, active traders will most likely place their stop-loss orders below $26.97 or the combined support of the dotted trendline and the 50-day moving average near $29.52, depending on outlook and risk tolerance.
Okta, Inc. (OKTA)
One of the top holdings of the IHAK ETF that could capture the attention of active traders over the weeks ahead is Okta, Inc. (OKTA). As you can see from the chart below, the bulls have been in control of the momentum despite March’s sudden pullback. The recent retracement toward the 50-day moving average and subsequent bounce higher will likely be used by traders as a sign that the bulls are in control of the momentum and that the uptrend will likely continue until the major indicators start to show signs of a reversal.
Akamai Technologies, Inc. (AKAM)
Another top holding of the IHAK ETF that will likely capture the attention of active traders is Akamai Technologies, Inc. (AKAM). As you can see from the chart below, a symmetrical triangle pattern as formed over the past several months. The recent break above the upper trendline combined with the bullish moving average convergence divergence (MACD) crossover could be used by the bulls as a sign that the price is headed higher from here. Stop-loss orders will likely be placed below the lower trendline near $98 or even the 200-day moving average, depending on investment horizon.
The Bottom Line
Cybersecurity is being propelled higher on macro-level trends that are dominating today’s world. Based on the charts discussed above, clear buy signals combined with nearby support are putting the risk/reward in the favor of the bulls.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.