The NEM/Bitcoin pair (XEM/BTC) launched its uptrend on December 19, 2017 when it breached resistance of 0.00005. The price action triggered the rounding bottom reversal pattern on the daily chart. This attracted breakout traders and trend followers, which pushed the pair to as high as 0.000137 on January 4, 2018. In less than three weeks, the pair grew by 174%!
As the target of the reversal pattern was achieved, those who bought the breakout and followed the trend started to take profits. The increased selling pressure drove the pair back down to 0.00005 on January 16. Bulls bought the dip to keep the market stable. However, the technical damage was already done.
Fear gripped the market as bears ignited a selling frenzy. XEM/BTC continued its plunge without any significant response from bulls. The market started to settle only when it bottomed out at 0.00002868 on March 5, 2018. While the pair is still in accumulation mode, it appears that the end is in sight.
Technical analysis show that NEM/Bitcoin is primed to take out resistance of 0.00005. This would trigger the double bottom reversal pattern on the daily chart.
To complete the breakout, the pair must print at least seven million NEM units on the daily chart. Those who bottomed fish the market are very likely to take profits at the resistance. The pair needs buyers to absorb the increased selling activity.
The strategy is to buy the breakout at 0.00005 after the volume requirement is met. If bulls take out the resistance, the market will explode to our target of 0.00007.
The process may take less than a month.
Daily Chart of XEM/BTC on Poloniex
As of this writing, the NEM/Bitcoin pair is trading at 0.0000447 on Poloniex.
Summary of Strategy
Buy: Breakout at 0.000005 with volume of seven million NEM units.
Stop: 0.0000467 after the breakout.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.