Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
After a steady rise on Namecoin from late last month, price has retraced a few pips, and we could expect it to continue dropping for a while yet.
Let’s take a closer look at the four hour timeframe on NMC/USD below (click to expand):
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I’ve done the Fib study from the low on the 25th of February (which was also the low of 2014 so far), at 2.6, till this month’s high, at 4.15, representing a 60% increase in value in just over a week, which although significant, pales in comparison to the kind of movement we saw back in late 2013.
However, as mentioned, nonetheless it was a serious move upwards, especially given the strong bears that were out in full flow over from the start of the year.
But look at the candle marked in red. This is a very powerful bear candle. Firstly, it’s upper wick is exceedingly long, and secondly, it’s closed outside the upper Bollinger band. A beautiful reversal sign. This candlestick pattern is on the H4 timeframe, and usually, the higher the timeframe, the more powerful price action proves itself.
Also, I already discussed in yesterday’s analysis further reasons for the drop, this time via the H1 timeframe. And when you’re getting multiple timeframes agreeing like this, then it really strengthens the potential.
Right now, price is hovering over the 38.2% Fib level, at 3.56, where I believe it will remain for the rest of the day, or thereabouts.