NEM (NEM/USD) Analysis January 19, 2018
This cryptocurrency pair is a real gauge for measuring volatility and who would have thought that 6 weeks gains could be undone in a span of two weeks? It’s funny but not a playing matter for those who don’t want to cut losses. With these kind of movements, they might also be right and after all, this major retest of break out support line at around $0.40 is perfect and as hard coded when trading such strategies.
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Notice the slight over-valuation as shown by last week’s bear candlestick has been corrected and recalibrated in a major way. All we are waiting for is to see how prices react at the long term support marked by the significant middle BB.
Besides, our safety net-assuming prices trickle down-will be at Q2 and 3 2017 highs at around $0.36. This level is the main support line from where prices broke and rallied. If they do and prices reverse, the second phase of a typical bullish break out pattern would have been completed.
However, judging from price action, NEM bears did bounce off the first Fibonacci extension at around $0.58. The question now is this: will this be the end of sell pressure now that the 20 period MA has been retested?
In the daily chart, I have place a Fibonacci retracement tool between recent highs and Q4 lows. From this, it is apparent that NEM found support at $0.53 and that is the 78.6% Fibonacci in this steep bull rally.
Even though prices recently broke off main support at $1.14, sellers need to close below $0.51 and perhaps test $0.36 if bears are indeed charge but as it is, that’s a tall order as buyers are beginning to get in the trade. Check those long lower wicks and yesterday’s bull candlestick.
As it is, all that is needed is a confirmation of yesterday’s bull candlestick and prices might as well close above $1.14 which will be wonderful for buyers.
Prices are recovering and after reversal from $0.53 triggered by that double bar reversal pattern and a couple of bull soldiers, prices are back towards $1.14 previous support now resistance.
Now, here’s the thing. We are overly bullish and for prices to close above this immediate ceiling, we need a big thrust and close above the middle BB. Otherwise a bear reaction at current prices might fuel further bear pressure.
On the flip side, I recommend buys only when there a recovery and close above $1.5.