Technical Analysis and Market Entry: NEO Exposed to a Stronger Wave of Sellers Following Pennant Breakout 

NEO
  • The NEO price remains vulnerable despite the recent small gains observed, bouncing off the lowest levels seen since May.
  • NEO is reportedly considering a network integration with Celer Networks to enhance scalability. 

NEO/USD: Recent Price Behavior 

NEO’s price action has been very much tilted to the downside since late June; it has continuously struggled to find any stabilization. NEO/USD has fallen over 55% within the last seven weeks, from the heights of $20 down to $9. It dropped to its lowest level since 6 May, marking the biggest bear market seen since November 2018.

A bearish evening/shooting star candlestick was produced via the weekly view, which was then followed by the detailed selling. NEO/USD had run into a large supply zone, a territory of which the price has not traded above since September 2018. The price is yet to show a strong signal that the current bear market is over.

Price behavior from mid-July was moving within consolidation mode, which led right up until 9 August. During the noted period, technical price action formed a bearish pennant structure. The bears managed to capitalize on this, playing out to the textbook with the breakout south. A breach and retest of the pennant were seen between 9-12 August, before resuming selling pressure.

NEO/USD weekly chart.

NEO’s Possible Integration with Celer Networks

NEO is reportedly considering integration with Celer Networks, which is a layer-2 scaling platform, as they look to enhance scalability.

Celer Network is said to be “a leading layer-2 scaling platform that enables fast, easy and secure off-chain transactions for not only payment transactions, but also generalized off-chain smart contracts. It enables everyone to quickly build, operate, and use highly scalable decentralized applications through innovations in off-chain scaling techniques and incentive-aligned cryptoeconomics.”

The director of NEO’s Eco Growth, John Wang, commented that the integration with Celer is currently being discussed. He said:

“A public blockchain is more than a currency: it needs to have the infrastructure for lots of users to come to it … to enable people to do anything.”

The development team at NEO is presently working on version 3.0 of their network. The two primary goals of the upcoming release will be to improve stability and scalability.

Trade Recommendation

Given the recent pennant structure breakout and retest, vulnerabilities remain tilted to the downside. NEO/USD is caught between two key zones: A demand area which has been breached ($11.50-$10.00) and then $9.50-$8.00. The latter range is where the bulls kick started the most recent run north; this came into play on 10 May.

In terms of targets to the downside; $8.00 and $7.00 are on the horizon. Stops would be placed above the noted former demand and pennant at $11.85. The bulls will need to force a break and closure back above the detailed zone to shift the current bearish bias.

NEO/USD daily chart.

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. 

Author:
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.