After 11 weeks of sustained USD bull pressure, NEM is finally finding support. Indeed in the complementing daily chart, we saw that there was a strong break below support line at around $0.20. This same level lies around the 50% Fibonacci retracement level as drawn from recent NEM Hi-Lo. According to the weekly chart, $0.18-$0.20 acted as support in 3 different occasion.
This was before that NEM leg up following a 75% devaluation from May highs. In my opinion, unless NEM prices close above the 20 period MA by the end of this week then bears can relax knowing that the break out strategy in lower time frames-clear in daily chart- is still valid. After all, there is no change in momentum-stochastics are still bearish with %k and %d diverging.
First of all, notice that in the daily chart, the 20 period MA was broken through and momentum to the upside remains strong. Before a possible retest and reversal at $0.24, we shall only be taking longs before then.
From a top-down approach, two things are clear. There is a double bottoms at September 15 and November 02. November 2 retest of support line at $0.15 led to an overextension to the downside.
After wards, there was a correction which broke above the weekly and daily resistance levels on November 8 following a period of bullish divergence between October 29 and November 2.
As mentioned before, NEM future trend will be defined by its ability to close above $0.24 which is a strong resistance line in the daily chart. $0.24 is also a close above main resistance trend line in the weekly chart.
Current NEM prices are rallying in the 4HR chart. Matter of fact, NEM price action is along the upper BB and that is what is called BB hugging. It always signal high momentum. If anything, earlier entries could have been beneficial and I would not recommend entry now.
Our main resistance line is at $0.24, which is $0.04 away from the current price levels. Instead, since there is always a chance of correction at $0.22 resistance trend line, we shall wait to see how NEM bulls react.
If there is a strong sell signal and a bearish candlestick, initiate shorts and let take advantage of the now valid bear break out trade following that bear break out on November 2.