Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
From the start of the month, Peercoin has been dropping, until today, where it hit 2.8, a key support and target level, as we’ll see later on.
Firstly, let’s take a closer look at the hourly chart on PPC/USD (click to expand):
I’ve drawn the Fibonacci study from the high of March at 3.35 until today’s low at 2.79.
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Price reversed at this point, due to a number of technicals. We had the Stochastics turning upwards, whilst being underbought, and the Awesome and Accelerator Oscillators turning green as well. Price shot up on that candle until it hit the 38.2% Fib retracement level.
In the next couple of hours, price continued to rise, before stalling at the 61.8% Fib level at 3.14, circled in blue. You can see how price tested that area on three consecutive occasions, thus proving itself as a relatively strong resistance area. And now, with the Accelerator Oscillator having turned red, I anticipate price to decline until 3.000, which is of course a major psychological figure.
However, let us just rewind a few hours and take another look at today’s low. I mentioned how the above technicals indicated some bulls, but that wasn’t the only reason. Actually, this place already had some potential support due to it being the low of the past few months, as the naked chart below demonstrates:
So yes, we know the 2.8 is a strong support level because it’s a major low for PPC/USD, but why 2.8 in the first place? Once again, as is so often in trading, it all comes back to Fibonacci. 2.8 is actually located at a Fibonacci extension ratio, namely, the 161.8% level, as I’ve drawn below: