Iconic lingerie retailer Victoria’s Secret (NYSE: VSCO) has experienced a rapid resurgence in its stock price over the past week. The catalyst behind this impressive rebound was primarily the company’s improved Q3 outlook, unveiled on October 12.
As a result, Victoria’s Secret saw a remarkable surge of more than 20% in the past seven days, and according to popular analyst and trader Nebraskangooner, VSCO is well-positioned to continue its upward trajectory.
VSCO’s uptrend looking ‘decent for continuation’
In his analysis posted on October 19, the analyst pointed out a significant trend in the VSCO chart. According to his observation, the stock price is displaying a bullish divergence in its on-balance volume (OBV) indicator.
“This chart looks decent for continuation. Monthly [chart] working on a nice bullish candle so far.”– Nebraskangooner wrote in his post.
The OBV indicator is a technical analysis tool that assesses buying and selling pressure in a stock. It calculates a cumulative total based on the volume of trades, with positive volume added when the stock closes higher and negative volume subtracted when it closes lower.
A rising OBV (blue line in the lower part of the chart) typically indicates strong buying interest and suggests that a stock’s price may rise, while a falling OBV implies the opposite, indicating potential price declines.
VSCO stock price analysis
At the time of writing on October 20, shares of Victoria’s Secret were standing at $18, up 0.5% in the past 24 hours.
The retailer’s stock surged nearly 19% in the past week, adding about $200 million to its market cap during this period, according to TradingView data.
Year-to-date, however, the stock is still sharply down by more than 50% due to dismal quarterly earnings reports and a challenging macroeconomic environment.
If the bullish indications of the OBV tool are correct, VSCO may face an important resistance at the 100-day moving average (DMA), which is located at $18.40. Piercing through this barrier would pave the way for the bulls to take aim at the next resistance level around the $22 mark.
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