Lisk (LSK/USD) Analysis November 29, 2017
Despite last week closing as bearish, bull momentum is still strong and all you have to focus on is the size of last week candlestick to judge if it was the beginning of a major reversal or a minor, natural correction.
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All in all, bull momentum didn’t change. We still have these diverging %k and %d stochastic signal lines diverging from the oversold territory. The fact that price action could not test the support-previous zone at around $6.4 means bulls should be looking for buy opportunities in short time frames.
From the Fibonacci perspective, it is clear that reversals happened at around 50% and 61.8% retracement level. After pasting an extension tool from the same high-lows, the potential upper limit of our take profit level is projected at the 61.8% extension level of $13.55.
In the daily chart, we note that after a bear divergence and LSK over-valuation on November 12, price action corrected in an overly bullish trend.
Bulls also had to approximate the extent of the ensuing LSK correction. This means that gauging potential reversal zones was important. In this case, using Fibonacci retracement tool does the job well especially if you paste it between the base of the previous bull flag from which the rally begun and November 16 highs of $12.21.
From it we can see that prices are reversing from around the 50% and 61.8% levels just like in the weekly chart. But in this case, we have a stochastic buy signal from oversold territory complete with higher highs bouncing from the middle band. At the same time, price action is testing August highs of $8.5 after LSK bulls failed to close above this level after 5 days of accumulation.
So, we now know that both the weekly and daily charts are bullish. Because of this momentum based fact, we shall only be taking long positions.
In our entry chart, price action is moving inside a wedge but price is above the 20 period MA with buy stochastic signal in place.
What we shall do now is wait for a break out above the minor resistance trend line. Depending on your risk level, you can place your buy stop at $8.72 or at $9.05 and benefit from a surge in case LSK bull push prices higher.