NEM (NEM/USD) Analysis December 27, 2017
The smart economy currency is rallying. A couple of strong bull candlestick along the upper BB and the facilitator is testing new highs.
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Last week highs have been cleared and we have a little bit of sell pressure from obvious reasons. See how last week and the week before that closed above the upper BB? It can’t continue forever, prices might have to move and even close below the upper BB. These are rules derived after extended period of observations.
From the weekly chart, we can see this long lower wick and attempts of higher highs with a clear stochastic buy signal meaning buy pressure is still high. From this time frame, we shall set our minor resistance at $1.15 and any sell signal or pattern beyond that will be our sell entry.
For buyers to be in charge, $1.15 must be cleared. Conversely, if sellers are to put their best foot forward, then we must see if December 22 bearish engulfing candlestick is confirmed today or in lower time frame sessions.
Our immediate support is the 20 period MA and since we already have a stochastic sell signal in place we only need today to close as a bear candlestick.
Now, our entry chart is interesting. Like the daily chart, the 4HR chart is bearish and the stochastic signal is perfectly turning from the overbought territory in response to sell pressure. We can also see that even after sustained buy pressure, prices became choppy after December 19.
December 22 bear pressure lead to that close below the middle BB but buyers jumped in and pushed prices to current levels. Since we had already said chances of correction towards equilibrium is high, we shall be taking short positions only and as it is, there is an opportunity for short entry.
Sellers only need to wait for a close below the middle BB before initiating shorts and aim at December 22 lows of $0.50.