NEO Takes a Dive as It Breaks Down From a Short-Term Channel

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In Brief
  • NEO is facing resistance at $18.60 and $21.10.

  • The price has broken down from a short-term parallel ascending channel.

  • There is support at $16.10 and $13.50.

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The NEO price has been moving downwards after it was rejected by an important Fib resistance level on Nov. 25.

The breakdown from a short-term pattern suggests that the price will continue falling towards the support levels outlined below.

NEO Takes a Dive

NEO has been moving upwards since Nov. 5, when it reached a low of $12.94. The upward move culminated in a high of $21.91 on Nov. 25. Since then, it has been moving downwards.

The high served to validate the 0.618 Fib retracement level of $21.10 as resistance, leaving two upper wicks in place. The rally stopped right at this resistance level making it likely that the upward movement was corrective.

At the time of writing, NEO was trading just below the $18.60 resistance area with the closest support at $16.10.

NEO Chart By TradingView

Long-Term Levels

Cryptocurrency trader @Cryptodude999 outlined a NEO chart that shows a long-term breakout above an important level and a retest of support.

Source: Twitter

The previous level is at $13.40 and the price has indeed retested it as support after breaking out (shown with the green arrow below).

However, there is another important long-term resistance level at $24, below which NEO has been trading since Oct 2018. A breakout above would likely trigger a very sharp upward move.

Technical indicators are neutral since while the RSI is above 50 and increasing, the MACD is moving downwards. Meanwhile, the Stochastic Oscillator has made a bearish cross.

Therefore, there is no clear trend direction. This and daily time-frame readings suggest that ranging will most likely occur between these two levels.

Chart By TradingView

Short-Term Breakdown

The shorter-term two-hour chart shows that NEO has broken down from a parallel ascending channel and validated it as resistance afterward (red arrow).

The presence of the channel suggests that the increase was corrective, while the breakdown confirms it.

Therefore, NEO is likely to fall towards the previously mentioned $16.10 support area.

Chart By TradingView

However, if the move since Nov. 25 is an A-B-C structure, which looks likely due to the rejection from the 0.618 Fib (black), the downward move could take NEO even lower.

If the A:C waves have a 1:1 ratio, NEO would decline all the way to its Nov. 5 levels near $13.50.

Chart By TradingView

NEO Conclusion

To conclude, the NEO price should decline in the short-term and reach at least one of the support areas at $16.10 and $13.50.

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Valdrin is a cryptocurrency enthusiast and financial trader. After obtaining a masters degree in Financial Markets at the Barcelona Graduate School of Economics he began working at the Ministry of Economic Development in his native country of Kosovo. In 2019, he decided to focus full-time on cryptocurrencies and trading.

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