NEM (NEM/USD) Analysis January 1, 2018
The smart economy facilitator upside pressure is obviously capped. As I have reiterated, there is no short cut and should this week candlestick end up bearish, then it would be inviting for sell pressure and that is for obvious reasons-95% of last week’s weekly candlestick closed above the upper BB.
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Even though we can go ahead and interpret this as a two way thing-that of extreme bull pressure or token over-valuation, it will be price action that will determine the eventual direction and define what is best for NEM.
As it is, we have a stochastic buy signal complete with diverging %k and %d and in the primary chart, this week’s candlestick is banding along the upper BB which is not a bad thing if you are net bullish.
In the daily chart, the middle BB and our equalizer remains a strong support even after a double bar reversal pattern on December 22. From the chart, we can see a couple of higher highs with losses experienced on December 22 already recovered.
A sell signal is in place but as long as prices remain above $0.93-which is the second Fibonacci extension level in the weekly chart then buyers are in charge.
Now here’s the thing-we are looking for bear reversal patterns and already there is a stochastic sell signal BUT since we have seen rejection of lower lows around the middle BB any close above $1.1 will invalidate this bear projection.
We pasted a Fibonacci retracement tool earlier this week to map out potential reversal areas. As expected and visible, reactions at key levels are clear from the chart.
The minor support trend line connecting December 24 and 28 lows will be our bear trigger while that other trend line completing this ascending wedge in the 4HR chart will be our bull trigger.
Already, there is a stochastic buy signal and price action being murky as it is, we shall wait for break outs and maintain a bullish skew.