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Many believe that NEO’s potential will be fully realized only in about 3-5 years from now, so it seems to be a good idea to ‘hodl’ the cryptocurrency through the dips.
Let’s look at the charts and try to analyze its long-term and short-term potential.
Post listing, NEO exchanged hands below $1 for a long time. Then, at the end of May 2017, the price started to rise and hit a high of about $58 levels in August of last year.
After such a sharp rally, it was logical to expect some profit booking, and that is what happened. Prices corrected to the 20-week EMA but managed to stay above it until early December.
The cryptocurrency again broke out of the range in mid-December, and the up move topped out around the $200 mark in mid-January 2018. The ensuing correction reached a low of just about $44 levels in early April of this year.
If history is an example, the digital currency rallies hard, follows it up with a deep correction and after a period of consolidation the up move resumes.
In the current bear phase, NEO has completed a sharp correction, we can now expect it to consolidate for a few weeks and then resume its uptrend once again. Currently, the 50-week SMA is providing support, while the 20-week EMA is acting as a resistance.
Let’s identify the important levels on the daily chart.
The NEO/USD pair recovered smartly from the lows but is facing a stiff resistance at the downtrend line and the horizontal line around the $80 mark. Though the bulls succeeded in breaking out of $80 on April 24, they could not sustain the highs, and the price dipped back below the trendline on the very next day.
Currently, we find a rounding bottom pattern, which will complete on a breakout and close above $80 levels. This has a pattern target of $115. Another possibility is that, above $80, there is a minor resistance zone between $92.5-$95.5. Once this is crossed, the cryptocurrency could skyrocket to $140 levels.
On the other hand, if the price breaks down below both moving averages and $64, it will become weak and slide back towards the early April lows.
Can we make use of the information above?
How to trade the NEO/USD pair now
Long-term investors can expect a few weeks of consolidation, but history suggests that the next trending move should be to the upside. Therefore, they can wait and buy NEO on dips and keep a stop loss of $40.
Short-term traders can wait for a breakout above $85 to establish long positions with stops around $65 levels.
Traders who follow us and are long at $64 levels should maintain their stops on the remaining position at breakeven. Currently, the cryptocurrency is finding support at the moving average. A bounce and a break above $85 should reward the traders immensely. Hence, hold the position with the designated stops.
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