NEO (NEO/USD) Analysis January 25, 2017

After last week, the pump slowed down and bears were handed with a very clear mission statement: Drive back prices to within normal ranges. This correction is welcomed by buyers because they will find space and time to fine turn entry as they buy on dips.

So, should we be ready to enter longs? No, not yet. Why? Well, it is likely that sellers will drive prices further towards $100 or last week’s lows as the double bar bear reversal pattern is confirmed. Sustained close below $100 and we can as well start thinking of August highs and considering the lagging middle BB as our potential support in our analysis.

Momentum wise, we have a stochastic sell signal turning from deep the overbought territory but then, they are lagging and should just be used as hints but not reason for buying or selling.

In the daily chart, the middle BB was broken after January 22 close and this is another reason we should be looking for short term sells. One thing though, let’s not be carried away by these sell pressure and consider that we are potentially trading in a bull break out with strong support at $85.

Why am I putting emphasis on caution? Besides the break out, look at the way $85 flashes with 61.8% Fibonacci extension level. However, nothing is hard coded and even if sell momentum is high and prices break below $85, $50 can be the next reversal zone.

Even from a momentum perspective, bears are in charge and the best approach for a clean cut if to look for sell signals in our entry chart.

 Momentum wise, unlike the daily and weekly chart, bull momentum is building up but it will mean nothing if that double bar buy reversal pattern and buy signal is not confirmed with prices closing above the middle BB.

Today, I will not recommend buys because after all, the prices are at around last week’s lows and if we sell, we shall be entering at poor prices. I would like to see appreciation and that is why our potential sells is at $155 or the 38.2% Fibonacci retracement from last week’s high-lows.

Here’s another thing. If NEO prices break above $155 and is sustained above $170, then that would entail a reversal from the middle BB and we should consider buying.