Peercoin has tested a key support zone four times in four days, with the latest test in fruition. Can the support at 2.03 hold this week?
Let’s take a closer look at the latest PPC/USD Daily chart below (click to expand):
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I’ve performed the Fibonacci study from the low of this year on the 11th of last month at 1.280, until the high of last month on the 16th, at 3.245. This was an upsurge of great magnitude, which saw virtually unprecedented gains on Peercoin in such a small time window.
But every rise has a fall, and in this case, the market gave us a clear indication as to what was going to happen following the two candles marked in a red circle. We can see how both of them possessed relatively long upper wicks, whist having significant lower bodies, and minimal no lower wicks. This, in conjunction with the fact that both these candlesticks opened and closed above the upper Bollinger bands really does send out a bear message, and a strong warning to bullish investors.
What happened next was exactly what I would have expected, i.e. a strong downtrend. Note how the indicators didn’t fall into place a few days after the above reversal pattern, once again proving the powerful nature of candlestick patterns, allowing the savvy trader to anticipate before the event. I’m not saying this is alone to start selling, but at the very least, if I was long and this pattern occurred, I’d seriously consider exiting my position, or at the very least close out some profits, and possibly apply a tighter stop or trailing stop.
Right now, price is located at the 61.8% Fibonacci retracement level at 2.03, marked in blue, we can see that since the 2nd of this month, 61.8% has been tested every day. Will price break below here? Well, looking at the indicators doesn’t provide us with a concrete answer quite frankly, for example the Stochastics are in oversold territory, whilst heading north, whereas the two Bill Williams’ indicators of Accelerator and Awesome are showing red, so I’m not leaning to a specific direction at the moment.