Trade Recommendation: NXT

While we wait for Bitcoin (BTC/USD) to bottom out, let’s continue looking for altcoins that have established a clear short-term bottom. One that fits the category is NXT (NXT/BTC). This altcoin printed new yearly lows of 0.00000742 on December 15, 2018. At that price level, the market was down by just over 85% from this year’s peak of 0.00005023.

This altcoin may look extremely bearish but it is ripe for a bounce. With the market trading close to the yearly lows, we have an opportunity to enter positions with a very favorable risk to reward ratio.

Technical analysis shows that NXT/BTC has established a short-term bottom at 0.0000075. This level may not seem important but a look at the weekly chart shows that this is the cryptocurrency’s parabolic support. The market rejected lower prices at this level in November 2017. Then, this coin used the support to launch a strong rally that sent the market to as high as 0.00014 a year ago.

Thus, the market’s ability to stay above this level is not a coincidence. This may not be the bottom or the point of reversal but we can expect NXT to give us a meaningful bounce at this point. It is also possible that this crypto will trade sideways from hereon. For now, however, we’ll just play the bounce.

The strategy is to buy as close to 0.0000075 support as possible. As long as bulls stay above this level, NXT will likely rally to our target of 0.00000935.

The process may take less than a month.

Daily Chart of NXT/Bitcoin on Poloniex

As of this writing, the NXT/Bitcoin pair is trading at 0.00000767 on Poloniex.

Summary of Strategy

Buy: As close to 0.0000075 as possible.

Target: 0.00000935

Stop: 0.00000735

 

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.