PPC/USD Technical Analysis – 4th April 2014

Peercoin fell from a month high of 2.174 to 1.7, a loss of more than twenty percent. The good news is that there seems to be signs of recovery, however with the long term trend still very bearish, any recovery could be short lived.

Let's take a closer look at the PPC/USD four hour chart below (click to expand):

I've performed the Fibonacci study from the high of the month at 2.174 to the low of the month at 1.7.

The first thing I want to focus on is the cluster of candles in the red ellipse on the left side of the chart. What's interesting about these candles is how they were enveloped within in a Bollinger Squeeze, we can see this by observing the angle of all Bollinger lines, how they were pretty much horizontal. When all three Bollinger lines are as such, for a number of candles, then we can expect inflation. And quite often, by studying price action, it's possible to attain an idea as to which direction the inflation shall follow. You'll notice that the majority of the candles within the squeeze (red ellipse) have fairly long upper wicks, and minimal lower wicks - a bearish sign. In addition, we had the Accelerator Oscillator turn red, and by the end of the squeeze, the Stochastics started to cross down.

And so came the bear expansion. As mentioned, we saw price rocket down to 1.7, but take a look at the candle marked in blue. This candle, at the time of formation, may have seemed like a red herring, amongst all the bear candles preceding it, but actually, it represents a potentially strong bull pattern, since the entire candle both opened and closed below the lower Bollinger band, and with price always wanting to correct itself by trading within the bands, it follows that this could be an attempt at that correction. However, we would have to wait for a few candles further before attaining corroboration, which duly came, with the Accelerator Oscillator turning green, alongside the Stochastics heading north from an oversold position.

Eventually price retraced back up to the 38.2% Fibonacci level, marked in white, at 1.882, virtually to the pip, with a firm rejection. And it seems as though we're going to have another test of 38.2% very soon again, but with the Accelerator now red, we may see another rejection as opposed to any break.