Trade Recommendation: NEO

The NEO/US Dollar pair (NEO/USD) has been bearish since it generated a lower high of $169.50 on January 30, 2018. Just like other popular cryptocurrencies, the pair has been in bear territory for six months now. It recently recorded a 2018 low of $28.60. The high rise in volume on that day (June 24) showed that the price action triggered many stop losses. However, it also revealed that this price level is an area where demand exceeded supply as the pair bounced.

Furthermore, NEO has shred over 85% of its value from the all-time high of $198.20. Participants who were once really bullish about the market have most likely become despondent or possibly even depressed. However, anyone who lost money during the downtrend can more than make up for it by buying the bottom. Psychologically, this can be very difficult but our analysis should appeal to your logic.

Technical analysis show that NEO/USD may be in the process of carving a bottom between $25 – $30. This zone is the pair’s long-term support level. It is the area where market movers accumulated positions in the fourth quarter of 2017 before igniting a bull run starting on December 17, 2017. You will see this in the multiple volume surges during this period.

Also, the daily price range is tightening as the market comes close to the narrowest point of a large falling wedge. Based on the structure, NEO/USD will come to a point where it will trade in a narrow range between $25 – $30. With demand exceeding supply at this point, it is very likely that the pair will breakout of the pattern.

In addition, indicators are flashing reversal signals. A large bullish divergence can be seen on the MACD. Also, the daily RSI appears to be respecting its long-term support. 

The strategy is to buy as close to $25 support as possible. If bulls preserve this support, NEO/USD will likely breakout of the falling wedge pattern and rally to our target of $50. The process may take a month.

Daily Chart of NEO/USD on Bitfinex

As of this writing, the NEO/US Dollar pair is trading at $30.11 on Bitfinex.

Summary of Strategy

Buy: As close to $25 as possible.

Target: $50

Stop: $22.50

 

Disclaimer: The writer 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.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.