PPC/USD Technical Analysis – 4th March 2014

Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies. Over the past few days Peercoin had

Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.

Over the past few days Peercoin had been falling, but yesterday morning it took an about turn.

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Let’s take a closer look at PPC/USD on H4 (click to expand):

ppcusdh4_04_03_2014_linebreak

The downwards white trendline, which had been so strong for a number of days, simply couldn’t hold the bulls any longer, and price broke the line at 5pm GMT yesterday. Just look at how many times that trendline was tested over the past week. No fewer than ten.

In reality, there were signs of this reversal a few hours beforehand. Take a look at the two candles prior to the white encircled candle. You can see how both of them:

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a) Closed beyond the lower Bollinger line, and

b) Are dojis, i.e. with minimal bodies, and equally long wicks either side. An indication of indecision.

Then, concerning the next candle itself, i.e. the one marked with a white ellipse, we can see it’s a very bullish candle, possessing a long lower wick, more than half the entire length of the actual candlestick itself. So we’ve had two dojis and a very bullish candlestick. Almost textbook stuff so far.

Moving on, it’s important to look out for further technicals to be confident of a full blown reversal. In this case, we saw how soon after, the Accelerator Oscillator and the Awesome Oscillator turned green, whilst the Stochastics also crossed upwards.

The key question here is would the trendline hold, given such strong technicals. A break of the line would be confirmation of the reversal, and that’s exactly what happened, where it closed at a high of exactly 3.800, a strong psychological round number, AND if we add in some Fibonacci to our chart (click below to expand)…

ppcusdh4_fibs_04_03_2014

… we’ll realise that 3.800 also happens to be an important Fibonacci retracement level, i.e. 78.2%. Together, these two factors combined to form a strong intra-day resistance, which has since sent price falling back down to another important level, the 61.8% Fib level.

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