From Monday, Lumens price action has been slowly inching higher. The question now remains if this will actually lead to price confirmation as per last week’s over-extension. As always, every over-valuation should be corrected and that is what we are expecting this week. Despite the strong bull pressure, I recommend not fading price action and waiting for better price entries in the lower time frame and trading with the trend. After all, stochastics are bullish but if prices close as bears today, there might be a convergence and perhaps a cross over between %k and %d signals later as we can see in the secondary chart. Anyhow, we have marked our support at $0.20 being the second Fibonacci extension level as extended from Q1 and 2 high lows.
Zooming in to the daily chart, it is not rocket science to see the significance of the middle BB. All in all, this same level has been a very strong and reliable support line in the 2 months when bulls were in a rampage. I will wait to see how the over-extension in the weekly chart will spill over and lead to price closing below this level. If it actually does, then the bear divergence which is already in place will be followed through and the momentum which has been set in motion will further push prices lower. Unless something happens, buyers will be on the sidelines until a reversal pattern is printed.
Fact is, price movement has been muted in the 4HR chart and the way it is, price is moving within a very tight price range along the middle BB in the entry chart. This may lead to a Bollinger squeeze if it does continue this way. There is a sell signal in place with the 50% Fibonacci retracement level acting as resistance. If prices tickle down and close below the middle BB and main support at $0.2, then we sell according to last week’s trend.