Peercoin has been on a general downwards slope this week so far, initiated by a strong reversal pattern earlier this week. A number of technicals were in our favour for such a reaction to have occurred.
Take a look at the chart below (click to expand).
We’ll see how price tested the 4.825 level four times (twice on the 9th and twice on the 11th), before reacting heavily and heading south, thus proving that resistance was indeed strong. Secondly, price has been heading down for many days anyway, i.e. the long term trend is bearish. And thirdly, on the 11th, we’ll notice that price had closed above the upper Bollinger line with an impending Stoch reversal. So all these factors combined made the drop fairly obvious.
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That drop continued all the way until today, where price has just hit 4.000 a couple of hours ago, a very strong psychological whole number, and closing below the lower Bollinger line. Unsurprisingly, there was an immediate bounce off the 4.000 level. See chart below (click to expand).
We can see how within the space of the last two hours, price rose to the first main Fibonacci retracement level of 23.6%, which also happened to be located at the middle Bollinger line (at 4.200), before bouncing down a few pips.
However, with the Stochastic now reversing upwards, whilst being quite low, and the Awesome and Accelerator Oscillators also looking slightly bullish, I wouldn’t be surprised if price did manage to break the 23.6% Fib level later today. If not, then expect consolidation between that and 4.000.
Analysis provided by Ashton Fraser, learn more about his trading strategies at Forex Reversal.