Compared to other weeks, the current NEM candlestick has surged the most. Our potential resistance at $1.1 was blasted through as buyers pushed for higher prices earlier in the week. Most of the time, these early surges catch many traders unawares because from history, if price trends are known then it is easier to jump in after a correction as determined using Fibonacci retracement tools.
So, will NEM prices continue edge up in the coming weeks? Most likely This week? Highly unlikely! Why? At almost $1.21, XEM prices are stretched and more than $0.50 from last week’s high lows. If we bring in our fixed Fibonacci extension tool, then we can see that more than 3 extension levels have been broken this week.
Now, if that is not a major snap rally, then I don’t know. Price action is the master key, today we shall see if NEM will correct.
The race for new highs couldn’t be crystal in the daily chart. Besides the humongous bull candlestick, do you see something else? Yes! That of a bull break out and close above $1.15 after periods of horizontal consolidation which begun from December 19 through to January 2, when prices tested that resistance but failed to close above it.
The spike on January 3 was strong and closed above the upper BB meaning for volatility to be checked, prices must be confirmed within the BB. Look at yesterday’s candlestick and you will get my drift, January 3 was bullish but the consequent candlestick ended up bearish.
Short term traders can look for shorting opportunities today until after normal volatility is restored. Overly, any dip is a buy opportunity.
After a strong ride up and catching traders unawares, it’s only safe to say that a correction is necessary. Anyway, the surge broke more than two different Fibonacci extension levels drawn from last week’s high lows and stopped short of $2.18.
Compared to previous weeks, the current candlestick is overstretched and a correction is necessary. As long as prices remain below $2, any dip towards $1.35 is perfect for buyers. After all, there is a bullish break out in the daily chart and therefore a retest of previous resistance now support is inevitable.