NMC/USD Technical Analysis – 18th April 2014

Namecoin experiences massive gains from the 13th through till the 15th, more than doubling in value in barely a couple

Namecoin experiences massive gains from the 13th through till the 15th, more than doubling in value in barely a couple of days, but a powerful bear setup initiated a fifty percent retreat.

Let’s take a closer look at the current NMC/USD H4 chart below (click to expand):

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nmcusdh4_18_04_2014

I’ve performed the Fibonacci study from the last major swing low at 1.54 until the current high at 3.35.

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Price rocketed up from 1.54, with ten consecutive bull candles. This uptrend was also host to one of the longest bull candles from the past twelve months, quite spectacular, stopping just below 3.35, and for good reason, since, if we observe another chart, below, again on the H4 timeframe, where I’ve applied a Fib study to the previous swing high and swing low, we can see how this was actually a Fibonacci extension level, at 423.6%, where lots of bullish speculators exited their positions to pocket their profits (marked in white):

nmcusdh4_18_04_2014_ext

Fine, we have price hitting the 423.6% Fib extension, but that on its own doesn’t necessitate there’s going to be a reversal or even a retrace.

Until that is, we see what happened on the very next candle, marked in a red ellipse on the first chart, since this candle a) closed as a strong bear candle and b) both opened and closed above the upper Bollinger band. This tells us a potentially strong retrace is on the way.

Corroboration of this anticipated retrace came, by way of a number of other technicals lining up, including the Stochastics crossing over to bear down from overbought territory, along with the Accelerator and Awesome Oscillators turning red, with price eventually moving down to the 50% level at 2.45.

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