Validus Holdings, Ltd. is a globally operating insurance company with its headquarters in Bermuda, which offers a wide product range in the insurance and reinsurance sectors. The company was founded in 2005 and is listed on the NYSE under the abbreviation VR. In this technical analysis, we will expand on a possible short scenario.
Downward trend with rising volume
In the daily chart, a clear trend reversal can be seen. The all-time high from February was not upheld, and a downward trend formed that broke through the SMA200. The last two movements took place under rising volume, and the value is now in a correction that, at the current moment in time, is still quite strong. The daily chart reveals several targets that can serve as partial sale zones.
Wait for a weakening of the correction
The current correction is still too strong for an entry; we should wait for the prices to weaken. A further progressing correction, therefore, is favorable for us – this means we can find a more attractive entry, and the targets become more attractive.
In the subordinate trend, as is drawn in, we should wait for a reversal of the trend. The stop placement occurs after an entry according to trend trading at the last high of the signal trend. Alternatively, one can enter into a “fuzzy” trade if there is a wide, sweeping correction: the entry takes place as a whole near the high of the superior trend with a stop just above (blue line). This entry, however, is riskier and requires precise risk and money management. With fuzzy trading, a reduction of the position size should be carried out.
Before making an entry, one should take company news into account. In addition, one should observe the overall market as well as the actions of the central banks.
Possible trading parameters
Entry: depending on the formation of the hourly trend, between 52.40-53.40 USD
Stop: depending on the formation of the hourly trend, at the last high
Target: targets at 51.40 USD, 49.50 USD and 46 USD
Neither the author nor our company is invested in the securities and underlyings discussed at the time of publishing this analysis.
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