We will be looking a little deeper at the NEARUSDT 1Day chart and try to determine what could likely be the next move for Near. Our basic tools or indicator would be the Relative Strength Index (RSI) coupled with basic price action analysis and chart patterns.
First of all, I’ll walk you through the use of the Relative Strength Indicator. You may already know how to use this indicator to determine when the market is relatively Overbought or Oversold. For any of the overbought or oversold conditions, we will have to trade in the opposite direction of the current market in order to stay in the profitable market zone.
In this analysis, we’ll try to spot the right triggers for trend reversals using the RSI.
First of all, let’s observe the points A and B on the NEAR chart showing that A is higher than B. Also, the points C and D on the RSI window which correspond to A and B respectively. Here, C and D are rather on a straight line.
This case is not a bias but a proof that the trend lines joining the points A and B is correct and would take effect.
Alternatively, the points E and F on the chart show a downward trend but the points G and H corresponding to E and F respectively is showing an upward trend line as against the downward trend of G and H. This condition is known as a divergence. In this case, it is a bullish divergence because the RSI trend is bullish against the bearish trend line on the chart.
Another fact to consider is that the length of the trend line also affects the strength of the divergence. The length of this line is small and will not last long in the market.
From this breakdown, the next reach of the price of NEAR should be at $7.47 along the resistance line P. This is because the strength of the bias is as small as the length of the line from E to F.