With a pending merger deal ongoing at NYSE Euronext ( NYX), it'd be easy to write this stock off as not tradable. After all, acquisition targets tend to have hard resistance levels at their offer prices, a barrier that dramatically limits upside -- but not in this case. Since NYX's shares are getting indexed to shares of acquirer IntercontinentalExchange ( ICE), and because there's ample time until the deal closes, this stock is still tradable.
That's a good thing because of the bullish price action that's currently showing itself in shares of the world's most storied exchange owner.NYX is currently forming an inverse head and shoulders pattern, a setup that indicates exhaustion among sellers. The inverse head and shoulders is formed by two swing lows that bottom out at approximately the same level (shoulders), separated by a deeper trough between them (the head). The buy signal comes on a breakout above the neckline, which was $41 for NYX. That buy signal triggered at the start of this week. A minor correction is giving traders a second chance at a low-risk entry in NYX. I'd recommend going long this name on the next white bar day. Just keep a tight stop at the 50-day moving average.