NEM (NEM/USD) Analysis January 23, 2018
As mentioned, the best way of exemplifying volatility is to have a look at NEM price action. Here, you will see how one single candlestick unwound what buyers had gained in 4 weeks. It was indeed stomach churning especially if you had bought at around week ending December 14 highs.
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Anyhow, after that double bar reversal pattern and confirmation, we shall be looking for sell signals especially if prices close below the 2nd Fibonacci extension level at $0.93. Already, bears tested the middle BB but the reaction was massive and we expect bears to build momentum and have a go at it again before buy pressure resume.
On the flip side, trading against the main trend is often not profitable and therefore I will be watching the 3rd Fibonacci extension level at $1.29. It is not hard to see why and after last week’s long lower wick, buy pressure may spill over to this week but chances of that happening is slim but not discounted.
Pasting a Fibonacci retracement level in the daily chart reveals that prices are general bullish as expected and the 38.2% level is our immediate resistance line.
Complementing this resistance is the middle BB-a reliable resistance-previous support level that might be broken only if buyers accumulate enough momentum to close above $1.30.
Taking cue from the weekly chart, we shall only initiate sells if $0.93 is broken and from the daily chart, that level is just above the minor accumulation with clear datum at the 61.8% Fibonacci retracement. Yesterday’s price action was bearish and in sync with the general bearish pressure in the weekly chart. Now, the main question is: Will bears continue pushing lower and even clear $0.50 in the coming days? Let’s see what the 4HR chart points at.
Like IOTA, the second phase of a bear break out pattern is on after bulls failed to close above the minor resistance line at $1.14.
Will this continue? Yes, chances are high and sellers can be encouraged because these lower lows is in sync with high time frame trend.
I will recommend sells with targets at January 16 lows of around $0.50 especially if the minor support trend line at $0.98 is broken in the next sessions.