NMC/USD Technical Analysis – 7th April 2014

Ever since last week's drop, Namecoin has managed to settle down for the time being. we spoke about then has held firm indeed.

Let us take a closer look at the latest NMC/USD hourly chart below:

I've performed the Fibonacci study for this chart from the start of the bears on the 2nd of April at 2.376, until the month's low at 1.664.

We can see how, within twenty fours after the drop, price retraced back to the 38.2% Fib level at around 1.935, marked with a red ellipse. What's interesting is that, even though we had a couple of candles close above that level along with the Awesome Oscillator showing momentum, price wasn't able to touch the 50% mark, primarily because the Stochastics by now were approaching oversold territory and the Accelerator Oscillator had turned red for a few candles. When we have a number of technicals conflicting like this, it often transpires that price can begin a period of consolidation for a while, ESPECIALLY if there is a Fib level nearby. In this case, we had the 38.2% level, with price pretty much sticking to it since the 4th.

So we know that for the meantime, the market is gravitating towards 38.2%. Whether price goes above or below, 38.2%, it keeps coming back to it, this is also reflected by the quick succession of multiple Stochastic crossovers in a short space, without them even entering the oversold (20) or overbought (80) zones.

As a result, we now have the Bollinger Bands forming a squeeze with relation to the 38.2% Fib level (marked in white). If this continues for some time, the bands will get narrower, and eventually the middle Bollinger line and the Fib line shall become one and the same, i.e. a complete amalgamation of the two lines.

And of course, following this, we have the anticipation of expansion...