monkia
Long

NEO - Textbook Wave 2 correction coming to an end?

BITTREX:NEOUSD   NEO / U.S. Dollar
If you follow me you'll know I have a core fund of coins that I rarely change, whilst I use my trading pot to buy in and out of USD and coins frequently. My strategy with this trading pot is to invest in those coins that are out performing BTC . I look for medium trends that are likely to last for 1 month or more. My trading pot is currently invested in BTC (40%), OMG (45%) and LTC (15%). ETH is looking like it may change its more recent down trend vs BTC but I am now looking for the next opportunity if that does not materialise.

NEO is forming a set up which may provide a good opportunity.

NEOBTC History
NEO completed the 1st Super wave back in August 2016, reaching a high of just under 0.014. It then underwent a prolonged corrective Super Wave 2 down to just under 0.002. As of mid December it entered Super Wave 3, with the Primary Wave i completing at the end of January. It is now in the Primary Wave ii consolidation. This consolidation has so far peaked at 0.0105 (0.618 fib) and appears to be in a corrective triangle moving down for its final E leg. This final leg would also find support at the 1D 50EMA.

NEOBTC Future
It would be a text book Wave 2 correction if NEO was to complete the E leg and break up out of this corrective triangle. However, it may go down and it is not unusual for a corrective triangle to extend its E wave to 9 in total (up to I).

On the upside, I always get excited when TA data points over lap. Taking the fib from Super Wave 1 provides a target of 0.0225 (1.618) to 0.035 (2.618). Almost the identical figures are achieved by taking the fib from Primary Wave i.

On the downside, if NEO breaks down through this channel, it is likely to find support at 0.007, the 0.382 Fib which would coincide with the the diagonal up trend line .

My plan
There's a couple of ways to play this.
(a) Buy after a small bounce on the E leg with a tight stop. The problem with this, apart from risking the stop, is that the triangle could extend to 9 waves tying capital up for no gain for several weeks.
(b) Do (a) but sell if no breakout occurs. This can be difficult to call and one can end up selling just before a reversal that results in a breakout.
(c) Wait for the breakout confirmation. The difference between the top and bottom of this converging end of the triangle is about 20%. It could also end in a false breakout triggering a stop.

My preference is to trade aggressively if the risk return works. In this case, I would be using BTC from my trading pot to enter the trade so I am not overly concerned if the triangle extends. I will want to see a bounce off the bottom of the triangle so I would enter at about 0.0115. The stop loss would be below the lowest point in the triangle at 0.010 (15%). The target would initially be 0.0225 (95%), giving a healthy risk reward of 7:1.

I would then monitor NEO vs LTC and OMG to see if I should swap any of those over to NEO. As always, I'll also be following ETH developments.

Trigger: A BOUNCE OFF THE BOTTOM OF THE TRIANGLE
Entry: 0.0115
Stop: 0.0098
Target: 0.0225
R:7
Probability: High risk early entry



** Wave annotation, largest first
Super : Large black e.g. 1
Primary : Bold grey e.g. iv
Minor : Circles e.g. (4)
Micro : Small light grey e.g.4
Comment: Close up of triangle and entry criteria
Comment: Zoomed out EW count
Comment: NEO continues to test the BTC trend line. I want to see a clear break from it before entering. Interestingly NEOUSD is also at a crucial 0.618 retracement level. We will likely see a bounce or break on both at the same time....

Comment: NEOUSD has bounced on the resistance but has gone through the triangle on NEOBTC. This is ok as that often happens. However, I want to see it come up through the triangle further and then see a bounce / retest either of the triangle or the 1HR 50 EMA.

Comment: The set up has failed, no trade for now.
Comment: Looks like it is attempting to put in a bounce at the bottom of this formation, aided by the 0.718 fib on the NEOUSD. However because the triangle formation is not as clean I'll not enter at this stage. I will consider entering if either:

1) We break through the bottom of the triangle and retest it
2) We break the top of the triangle
Wonderful TA! Any update? thx
Reply
monkia Binzaydan
@Binzaydan, thx. Patience is key...
Reply
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