NEM (NEM/USD) Analysis November 21, 2017
3 bar reversal off support on weekly chart
By the end of October and early November, NEM prices were testing and bouncing from the 61.8%-50% Fibonacci retracement levels. After last week’s candlestick close, a stochastic buy signal had been printed and the most important thing was that complete three-bar reversal pattern at support zone.
Despite prices closing below the 20 period MA and the main weekly resistance trend line, we expect bull pressure to continue this week. Besides NEM break out, last week’s candlestick had long upper wicks signaling USD bull pressure.
The daily chart is very clear about where the rapid sell pressure was from as seen in the weekly chart. On November 16, NEM price action gained-open and close price difference- $0.007 but that came after a $0.07 surge that momentarily broke above the wedge in the daily chart.
However, the good thing is that prices closed above the support zone defined by the base of the flag and the 20 period MA. Stochastics are also moving higher according to the defined trend.
Regardless of this upswing, what defined and solidified our bullish skew was that close above the 20 period MA on November 13. By doing so, NEM price action did flip from bearish to bullish after the 40 day cap was broken through.
In the 4HR chart, the bullish break out pattern is still in force with the immediate resistance line set at $0.22. We also notice that prices are oscillating tightly around the support zone which in the daily chart is the base of the wedge at around $0.18. This price level is significant for both bulls and bears judging from the number of times NEM has tested this support over the past one month.
Since prices are moving down from the upper BB with a sell signal in place, we shall wait until there is a stochastic buy turning from the oversold territory with a confirming bull candlestick and above average bull volumes before entering long probably at around $0.187 main support line. Our bull target remains at $0.22 and $0.24.
