NEM (NEM/USD) Analysis November 3, 2017

on Nov 2, 2017
Updated: Sep 19, 2019

Technically speaking, this week is important for USD bulls and bad for NEM. After a 6-week consolidation which started with that bull candle surge on September 15, 2017, price action is literally stuck within a $0.06 channel. Since the higher time frame takes precedence in determining trend direction, it was important to take a Top Down approach and initiate sell positions every time there are stochastic sell signals in the 4HR time frame as weekly charts are bearish.

Checking the chart you notice that just before the support line break out, USD bulls were consistently pushing NEO prices lower with $0.20 round number acting a bear brakes on 3 different occasions over the past 3 weeks or so. So, since this is a typical bear Break Out pattern, taking place early in the week, I will only wait till NEM corrects higher and a stochastic sell signal printed in the 4HR chart at the overbought territory.

Any farther NEM appreciation will definitely be a retest of support, now, resistance line and complete the second stage of a break out strategy. For trend traders, earlier in the week, the surge below $0.20 was very volatile as shown by the behavior of BB. They diverged with price action hugging the lower BB as $0.03 was eroded off NEM. Also note the relative distance between the 20 Period MA and the lower BB or close of each candlestick, NEM is actually moving lower and away from the middle band hinting extra volatility.

Because of the buy stochastic buy signal, we shall consider previous support and resistance trend lines to determine potential sell limits. Going back, you notice that $0.15-$0.16 is a strong support zone because at similar prices NEM bulls took over and charted higher. That happened on September 9, 2017, July 31, 2017 and other dates in Q2 and 3 2017. With NEM appreciation from $0.15, resistance is always found at $0.20 and that is why we have to wait until a sell signal is printed if we want entry at better prices presumably around that resistance level.