NEM (NEM/USD) Analysis January 3, 2018
Undoubtedly, NEM buyers are pressing on the gas pedal and after that break and close above August highs in early November 2017, bulls have never slowed down. Resoundingly, two resistance levels as projected by Fibonacci extensions have been broken.
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Now the question remains: will this buy pressure continue? Well, to me it depends and that would be directly linked to how price action and BB first reacts before we look at the lagging stochastics. As seen from the chart, 95% of week ending December 24 candlestick closed above the upper BB but it was last week when a whole candlestick closed above the upper BB.
That according to BB guidelines is a straight over-valuation and this week’s candlestick will be definitive if say sellers decide to slow down this buy trend and drive prices back to equilibrium which in my opinion is likely. If this happens, then $0.94 or the second Fibonacci extension level will be our immediate support line.
Now, zooming in to the daily chart and a clear resistance can be seen at $1.1. Besides the horizontal consolidation and lower lows relative to the upper BB, notice that the middle BB is increasingly being tested and this is not good news for buyers.
Yesterday’s candlestick ended up being bearish but for buyers to strive, we need a close above $1.1 otherwise we shall be looking for selling opportunities in our entry chart. Of course given the reliability of the middle BB that line remains as our short term support.
In our entry chart, we have this stochastic sell signal despite NEM higher highs. We can also see that price action is also waving its way up inside a wedge but the minor resistance trend line connecting December 19 and 25 highs will be our bear entry trigger line.
I recommend shorting in the short term and that will be confirmed if todays or tomorrow’s price action fail to close above $1.1 and instead a sell signal prints at the overbought territory.
That of course would be ideal and conservative traders can either place a pending order below the minor support line at around $0.90 or what until a better sell entry prints.