Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
Namecoin has been dropping since yesterday afternoon, let’s take a look as to the reasons why.
Click on the NMC/USD H1 chart below to expand:
How to Generate Leads Outside of the Box?Go to article >>
I’ve done the Fibonacci study from March’s low at 3.18 to yesterday’s high at 4.15. Now, we need to look at price patterns leading up to the reversal. The first thing we’ll notice is the candle ellipsed in red, even though it closed as a bullish candle, look how long it’s upper wick is, almost of the length of the entire candle. Then, the candle immediately following it, is a perfect doji, where it opened and closed at exactly the same point, whilst both its wicks are of equal length. Another classic consolidation/reversal candlestick pattern. All this, whilst the Accelerator Oscillator had turned red a couple of candles prior, in addition to the fact the Stochastics were overbought, and price itself had closed above the upper Bollinger band. So all in all, we had some very good signs that a reversal was about to occur.
And surprise surprise, the next candle was a bombshell. Just look how it dropped, with a very long body and no lower wick. This is a strong bearish candle indeed, and it’s of no surprise that the Stochastics then crossed downwards and the Awesome Oscillator also turned red.
Price then fell all the way to the 61.8% Fibonacci retracement level, at around 3.55, before rising to the 50% temporarily. Such was a force of the initial fall, that the Awesome Oscillator didn’t even flinch.
As I type this, price is again at 61.8%, and it could remain around this area for some time, before pushing down further until the 78.6% Fib at 3.39.