NEO (NEO/USD) Analysis November 7, 2017
In August 2017, alt coin NEO topped at $59 but by the end of the month, price action had reversed to August lows of $15. That was a 100% retracement. Coincidentally, $15 price is at a point of confluence with the 20 period MA in the weekly chart and is overly significant for bears.
You can also note that after touching $15, NEO appreciated closing that week as an inverted hammer which was confirmed by a doji candlestick one week later. After that doji candlestick, a strong bullish candlestick was printed pushing prices back towards $40 in a 3 bar reversal pattern called a Morning Star pattern.
However, looking closer, the push higher was not accompanied by strong volumes and prices continued to decline in consequent sessions. USD bull momentum is strong and continues to drive NEO prices lower following that main double bar reversal pattern and overextension to the upside in August 2017.
In the 4HR chart, it is clear that a bear break out pattern is in play. Since we are only taking short positions and aware that we are in the 3rd stage of a break out trade which is the actual bear trend following a retest, patience should be our asset now. Following that stochastics sell signal on November 4, price trended lower and actually broke the support line at $26. During the trend low on November 4, notice how NEO prices were confined within a descending channel with lower lows relative to the upper BB.
Before a strong sell signal is formed, two things can happen. Either NEO prices will appreciate higher and break above the upper limit of the descending channel at $28 before a retest of main resistance trend line at around $30-$31 or USD bulls may push prices lower past the main support line of $22. For the later to happen, the recent support now resistance line at $26 must cap Monero bulls.
It is highly likely that the former might happen as this is just the beginning of the week. Notice how the 20 period MA has been rebuffing lower prices with the formation of those bullish pin bars. In fact, earlier today, a strong bullish bar confirming a morning star pattern was formed at the 61.8% Fibonacci level drawn from $28, $20 high lows. The 161.8% extension levels falls at $32 and that represents the higher end in case NEO rally after today before a stochastics sell signal and reversal happens.