Guys, let’s not forget the significance of this week’s price action. Remember, if this week’s candlestick ends up bullish then we would have a complete 3 bar reversal pattern even if last week ended up being bearish but with those long lower and upper wicks.
Besides that potential development that relies on future price action, we should take note of where prices are reversing from. That is the 78.6% Fibonacci retracement level anchoring on this token’s high lows and just $0.25 away from 2017 highs from which our main support line at $1.1 lies.
Now, even though we have this bullish candlestick, we need to see a strong surge and close above the middle BB if indeed buyers are in charge. Otherwise, last week’s low volatility environment will persist if we don’t see any reaction at around $2.
When we zoom in and check the daily chart, we still notice that bears are in charge and even the reaction from the lower BB as shown from the double bottoms on February 5 and 6 couldn’t inject enough bull momentum for a close above $2, the middle BB.
As we have stated before, we have two key levels of resistance that might potentially define the short to medium term trajectory of this pair.
Those are the 50% and 61.8% Fibonacci retracement lines at $2 and $3 respectively. Remember, before this $0.8 consolidation with $1.42 acting as datum, price broken from $3 on January 30.
Like most alt coins, we saw this nice appreciation and close above this main resistance trend line in our entry chart. While we expected the trend to continue, support was found at $2 and right now, we have these lower lows heading back towards the break out line.
The thing is, if there is a reaction and a bull candle prints at around $1.40-$1.50, then buyers would be in a better position to buy. If not, a close below $1.21 invalidates the minor bullish break out.