Last week complemented week ending January 21 candlestick and even if last week’s candlestick was pretty much defined within the previous candlestick, what was important for us was how price action could react at around $1.8 and $2.
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It was a relieve for buyers and we could even see rejection of lower prices evident by that long lower wick candlestick as the week closed.
That’s not all, price action seems to be relaying a message by closing higher away from the middle BB and the main support line as marked by the 61.8% Fibonacci retracement level as drawn from recent high lows.
Going forward, and if bulls are to thrive, we shall need strong evidence with prices surging above the 50% Fibonacci level and $3 in the coming weeks.
When we check the daily chart, we notice that majority of last week’s price action was concentrated in the first half of the week where two bear candlesticks threatened to obliterate our short term support at $2.
After that, IOTA prices were stuck in a tight range, consolidating within a $1 with strong resistance at $3.
As it is, there are hints of higher highs especially with higher lows diverging away from the lower BB. For potential bull pressure, I shall focus on the past two candlesticks and note that they actually complete a 3-bar bullish reversal pattern called a morning star and today could make or break that pattern.
If bulls are to drive prices higher, then they first need to close above the middle BB and later the main resistance line. Depending on the break out, we shall initiate longs with stops just below $3.
From our probable sequence of events detailed in the daily chart, prices need to be accelerated and the first thing is break off from this damping consolidation.
There is a morning star pattern in the daily chart and that can only mean buy pressure in our entry chart if only the middle BB holds.
Conservatives should just stay away from IOTA until prices either close below $1.8 or surge past $4.2.