Lisk (LSK/USD) Analysis November 8, 2017
Traders at a cross roads?
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LSK traders can interpret the recent Lisk erosion in two ways. Either as a beginning of a USD bull run or a price consolidation within a bull flag. Personally, I prefer the later. As the higher time frames charts define our trend, it is clear that price action is trending within a larger bull flag.
To be specific, the first stage of this bull set up begun after August 19 when price action broke above July 2017 highs after surging $1.9. That was accompanied by strong bull volumes indicating high participation levels by LSK bulls. After wards, LSK rose to $8.6 before that down trend towards the base of the flag begun with that inverted hammer in the daily chart.
Pasting a Fibonacci retracement tool between the August-September Hi-Los, you notice that the current LSK prices are reversing from 38.2% Fibonacci level, a significant level for chartists. Furthermore, these same prices represents June 2017 highs so this the base of this bull flag is turning out to be a resistance turned support price level.
Before LSK prices started to chart higher, a bullish divergence pattern was formed. Notice that from the first week of September through to October 2017, a triple bottom as marked on the chart was printed. Thereafter, prices trended lower and retested the main support line at $4.2 on November 2. Compare that with the trend of stochastics within the same period which was charting higher and higher. In fact on November 2, that double bar reversal pattern with stochastics buys turning from over sold territory propelled prices higher back into the flag.
At the same time, $4.2 was the head of a minor inverted head and shoulder formation. As we can see, prices bounced off the neck line and shoulders with a LSK bull momentum high as shown by the buy stochastic signal in place.
My trade recommendation
In my opinion, the resistance trend line marking the hypotenuse of this bull flag will determine the long term direction of this crypto pair. LSK bulls will take charge if there is a strong break above. Likewise, if prices reverse from those levels, USD bulls will be in charge and bear trend will continue.
In the higher time frame, there is a buy signal in place and the same is spinning out in the 4HR chart. That is important at the moment for LSK bulls as there is uniformity. As we are in the 3rd quarter and near the apex of this bull flag wedge, a potential break out to the upside is likely.