Trade Recommendation: NEO
NEO (NEO/BTC) is another market that’s ripe for bottom picking. The cryptocurrency has been correcting ever since it printed a 2019 high of 0.002754 on April 4th. Today, July 15th, it recorded a yearly low of 0.001119. However, we believe the market is showing signs of bearish exhaustion and it is about to reverse soon. In addition to that, Bitcoin (BTC/USD) is starting to show signs of weakness. These are the reasons why we’re considering NEO/BTC.
Technical analysis shows that NEO/BTC may be pulling off a classic Wyckoffian spring. We have this view for several reasons.
First, the market breached support of 0.0012 on July 14th. The breakdown was accompanied by a spike in volume. This is a classic shakeout move. Market participants are being forced to dump their positions by making them think that support of 0.0012 has been legitimately broken. So far, this trick is working as NEO/BTC has dumped to as low as 0.001119 today.
However, the daily candle today has a wick below its body which suggests that buyers are absorbing the dump. More importantly, we can see a large bullish divergence on the daily RSI. This comes as the crypto pair is trading at oversold levels. These signals tell us that NEO/BTC is preparing for a reversal or at the very least, a dead-cat bounce. This is something that can be profitable.
The strategy is to buy as soon as the market stabilizes above 0.0012. If bulls can recover this price level and keep the market from trading below it again, we will likely see a quick rally to our initial target of 0.00175. Take that out and 0.0023 is next.
The process may take less than a month.
Weekly Chart of NEO/US Dollar on Bitfinex
Summary of Strategy
Buy: As soon as bulls recover 0.0012.
Targets: 0.00175 and 0.0023.
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.
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