Hi friends! Congratulations to my Twitter followers, who won this week's analysis vote, by voting for NEO! Let's jump right in! Looking at the four hour chart, we can immediately see that NEO has been producing some gut-wrencingly high volatility. In the past seven days, it has fallen from 170 to 64 — a 63% loss. However, within the last to days, the price has nearly doubled. This wild volatility appears to be here to stay, so keep that in mind, if you're planning on trading NEO. It is NOT for the faint of heart.
As you can see, NEO is in a downtrend channel , and the bears remain in control. Near the end of the recent sell-off, it broke down through the bottom of the channel, and found immense support at the 78.6% retrace. We can see that a bullish crossover appeared on the MACD , as price exploded higher into overhead resistance. As you can see, the midline of the downtrend channel has been very resistive, when NEO has traded under it. There were many occasions where NEO failed to rally above the midline, and that's where we are at this very moment. In addition to the clear resistive nature of this midline, we can see that there is a convergence of resistance here. Particularly, we have the 50 EMA (in orange,) the 200 EMA (in purple,) the 50% retrace, and the midline resistance. If you look closely, you can see that NEO is actually slightly above the 50 EMA , and the 50% retrace, but the other resistance levels are just above. Looking at the volume , you can see that it has been falling during the entire advancement from yesterday's low, indicating a deceleration in bullish participation. Here is where the HYPOTHETICAL visionary work comes into play. It is possible that NEO gets stopped by the resistance here, and reverses to form the right shoulder of a head and shoulders pattern (blue inverse arc.) You can see how the dashed black trendline , could eventually become the neckline of such a pattern. Conversely, however, the current price action does resemble a bull flag . Ultimately, we need more data to know if an inverse head and shoulders pattern is forming. This is purely a hypothetical assessment. With that said, if NEO turns lower, then we can watch to see if a right shoulder forms. A break above the midline, could slightly change this analysis.
On the MACD , you can see that it's rising into falling resistance (orange dotted trendline .) This tells us that the momentum may reverse, if the falling resistance is respected. That's perfectly inline with the hypothesis of a reversal to form the right shoulder of an inverse head and shoulders pattern. You may be wondering why I'm anticipating the creation of an inverse head and shoulders pattern, as opposed to just a lower high inside of the downtrend channel . Honestly, my bullish intuition has manifested from other areas of the market. I see that many assets are trying to bottom here, so an inverse head and shoulders would fit well with the bottoming market theory. However, THIS IS ONLY THEORY! Until we see more data on the chart, that confirms the formation of a right shoulder, this analysis is purely visionary. Usually, I reserve this sort of highly speculative analysis for my personal charting, but I've decided to share it with you, so that you can observe my methods. This is the same method that I used to project incomplete head and shoulders patterns in ETH, XLM 0.79% , and others. When it all boils down, we're slamming into one of the strongest resistance levels on this chart — the midline. If NEO fails to surpass it, we could end up trading all the way back down to the pink trendline , to potentially create the peak of the right shoulder. If this does end up being an inverse head and shoulders pattern, it would likely lead to a breakout above the top of the downtrend channel . Stay on your toes traders! And good luck!
