Technical Analysis and Market Entry: NEM (XEM/USDT) – Selling the Troubled Coin as NEM Remains a Gamble

  • Despite the NEM Foundation restructuring plan announced earlier in the year, holding XEM is still risky.
  • XEM/USDT does appear vulnerable to reversing its recent recovery. 

The XEM price, like much of the market, has been under pressure for much of this month after a short-lived rally early April. The XEM/USDT bulls pushed aggressively higher, gaining around 45%, within the space of just a few days. On 3rd April, the price achieved a new peak for 2019, rising to the highest level seen since 24th December 2018.

Following the print up at $0.08000, the market bears kicked in, triggering a chunky wave of selling pressure. It appeared to be profit-taking, this coming after a strong and fast move to the upside within a short period. The price is now back within a strong and stubborn bearish trend, as the sellers take back control.

NEM Remains a Gamble

At the start of this year, the NEM Foundation had to take strong action due to worrying financial issues that could have forced a closure of the company. The organization was on the verge of bankruptcy and had no option but to start big layoffs of its staff and plan a restructuring. The company reportedly spent $80 million on marketing in the year 2018. It is, of course, necessary to invest heavily in the development of systems and technology. However, disproportionate investments and unreliable advertising very much proved to take its toll on the foundation itself.

Despite the market initially being somewhat welcoming of the NEM restructuring plan, it cannot be disregarded that XEM is still a risky investment. Holding XEM, given the lingering fragility of the NEM Foundation, remains a gamble. There isn’t always guaranteed light at the end of the tunnel with any financial restructuring plan; it is very much up in the air. The recovery seen from February, after the detailed plan of action, could be subject to a full reversal by the market bears.

Trade Recommendation

XEM/USDT daily chart.

NEM/USDT recently broke down support, which runs from $0.06000 down to $0.05650, a known demand zone. The price has breached and retested this via the daily chart view, leaving the door open to further downside pressure. Given the above-noted uncertainty that floats around the NEM Foundation, shorts both fundamentally and technically look attractive.

A sell position from around the current levels, $0.05600-0.05500, with the initial target being $0.05000, should be noted. A move would see the price reversing the initial recovery run that commenced in February, having gained 50% at the time. Further to the downside, eyes will be on the following;: $0.04500, $0.04000 and then $0.03500, where the price commenced the latest bull run of 2019. Stops on shorts to be placed just above the noted demand area, $0.06100.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.            

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.