NEO - Swing and Positional Trade Setup
Atualizado
Overview:
NEO' is one of my favorite long term investments in the crypto space as it is considered the Ethereum' of China, has significant investments from Venture Capitalist, and as we know from the equities market, China’s government always favors the home team. NEO' is also considered a second generation smart coin and is focused on being a platform for the “smart economy” anticipating the future demands of the market and moreover is integrating with government regulation with their Public Key Infrastructure (PKI'). Governments are sure to regulate moving forward and finding the coins that address these regulations may be the difference in owning a winner and a loser.
Technical:
NEO' has pulled nicely back into our buy zone testing the 0.618 retracement of the previous bullish leg “C” and holding the lower end of our support zone at 111. The pullback negated our original wave count so I have revised the count accordingly. Pulling back into the buy zone is not enough, we need a signal(s) to confirm a reversal is or has taken place. Looking at the 12 hour chart we see the formation of an outside candlestick which is often a signal for a reversal. A second confirmation comes from the RSI where we tested the 40 level and have since reversed after a double top of the 60. A breakout of the 120 and 128 levels (0.382 and 0.618 retracement of wave 2) would be a third confirmation of the reversal.
Daily chart Below
The daily chart provides a very broader picture as the RSI only briefly dipped below the 40 level in September and has been very bullish up until the recent correction. In addition the overall trend channel, though recently broken, is very bullish in the long term. I want to be positioned with the longer term trend and not trade against it, shaving off into extreme highs and buying the pullbacks. In the very long term a 375 to 567 target area pushes NEO' into 25 billion to 37 billion market cap or about 1/4 to 1/3 of the current Ethereum' market. This is not inconceivable by any means and also provides some guidance to insure we are not over valuing a coin in the longer term. 500 is a legitimate price level.
Trade:
I am adding a full position here which is not the norm, but the chart is very strong in my opinion. I do not use automatic stop losses, but will look at the 111 level for signal that the trade has failed and may close at that time. I am using 4% of my overall portfolio for the total trade. Risk management is crucial as I often remind new traders. A 6% loss on this trade would result in 0.24% loss overall in my portfolio which is well within my risk tolerance. As a more conservative trader this also provides flexibility to adjust my stop loss in the event we get a unexpected pullback but the technical’s remain strong.
Swing Traders can target the 137 to 146 levels and take some or all profits, or move their stop level up accordingly.
As a positional trader I am targeting the longer term 184 to 198 levels and may shave off 1/3 of the position at the swing levels, or ride out a small pullback.
Comments:
Traders have a tendency to sell to early often missing out on larger moves. Investors have a tendency to hold too long often missing out opportunities to lock in small gains. My goal is to capture as much of a broader move as possible understanding it is not about calling tops and bottoms, it is about increasing my portfolio one trade at a time.
If you are new to trading, I can NOT emphasize enough that it is not about being right or wrong, it is about risk management. Big Position = Big Problems. If you make a trade and you can not SWAN then your trades are too large. Larger positions also emotionally affect a trader as pullbacks inevitably happen. The worry about a loss triggers emotional feelings in lieu of technical aspects, which often result in a trader closing too early, taking a loss, only to see the equity move higher. The end result is PORTFOLIO EROSION!
NEO' is one of my favorite long term investments in the crypto space as it is considered the Ethereum' of China, has significant investments from Venture Capitalist, and as we know from the equities market, China’s government always favors the home team. NEO' is also considered a second generation smart coin and is focused on being a platform for the “smart economy” anticipating the future demands of the market and moreover is integrating with government regulation with their Public Key Infrastructure (PKI'). Governments are sure to regulate moving forward and finding the coins that address these regulations may be the difference in owning a winner and a loser.
Technical:
NEO' has pulled nicely back into our buy zone testing the 0.618 retracement of the previous bullish leg “C” and holding the lower end of our support zone at 111. The pullback negated our original wave count so I have revised the count accordingly. Pulling back into the buy zone is not enough, we need a signal(s) to confirm a reversal is or has taken place. Looking at the 12 hour chart we see the formation of an outside candlestick which is often a signal for a reversal. A second confirmation comes from the RSI where we tested the 40 level and have since reversed after a double top of the 60. A breakout of the 120 and 128 levels (0.382 and 0.618 retracement of wave 2) would be a third confirmation of the reversal.
Daily chart Below
The daily chart provides a very broader picture as the RSI only briefly dipped below the 40 level in September and has been very bullish up until the recent correction. In addition the overall trend channel, though recently broken, is very bullish in the long term. I want to be positioned with the longer term trend and not trade against it, shaving off into extreme highs and buying the pullbacks. In the very long term a 375 to 567 target area pushes NEO' into 25 billion to 37 billion market cap or about 1/4 to 1/3 of the current Ethereum' market. This is not inconceivable by any means and also provides some guidance to insure we are not over valuing a coin in the longer term. 500 is a legitimate price level.
Trade:
I am adding a full position here which is not the norm, but the chart is very strong in my opinion. I do not use automatic stop losses, but will look at the 111 level for signal that the trade has failed and may close at that time. I am using 4% of my overall portfolio for the total trade. Risk management is crucial as I often remind new traders. A 6% loss on this trade would result in 0.24% loss overall in my portfolio which is well within my risk tolerance. As a more conservative trader this also provides flexibility to adjust my stop loss in the event we get a unexpected pullback but the technical’s remain strong.
Swing Traders can target the 137 to 146 levels and take some or all profits, or move their stop level up accordingly.
As a positional trader I am targeting the longer term 184 to 198 levels and may shave off 1/3 of the position at the swing levels, or ride out a small pullback.
Comments:
Traders have a tendency to sell to early often missing out on larger moves. Investors have a tendency to hold too long often missing out opportunities to lock in small gains. My goal is to capture as much of a broader move as possible understanding it is not about calling tops and bottoms, it is about increasing my portfolio one trade at a time.
If you are new to trading, I can NOT emphasize enough that it is not about being right or wrong, it is about risk management. Big Position = Big Problems. If you make a trade and you can not SWAN then your trades are too large. Larger positions also emotionally affect a trader as pullbacks inevitably happen. The worry about a loss triggers emotional feelings in lieu of technical aspects, which often result in a trader closing too early, taking a loss, only to see the equity move higher. The end result is PORTFOLIO EROSION!
Nota
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