Today I would like to write about NEO, that is sometimes seen as the Chinese Ethereum. NEO wants to be an open source, community driven platform for smart contracts and competes with quite some other cryptocurrencies like Ethereum, EOS, TRON, ICON, etc.
As of late I have not heard a lot of people talk about NEO and I have been following it in the last couple of months. It has been a sleeper and has not moved much, while even XRP started moving upwards ! Well as of recently I believe that NEO is starting to wake up from its hibernation and is breaking upwards from a channel it has been in for years.
Here is a weekly chart of NEO compared to the dollar with the indicator OBV (On Balance Volume) :
The green channel can be drawn differently, depending if you want to use wicks or not, but I keep it the way I have drawn it. NEO is in this channel since September 2018 and has been breaking out to the upside since last week. This weeks candle close is not yet done of course, so do watch out, because it can always break back inside the channel, but for now it looks good ! It will largely depend on Bitcoin as well if NEO will succeed or not.
When looking at the indicator OBV, which shows accumulation or distribution, it clearly shows accumulation on NEO. Since December 2018 it has been showing great strength and right now it is extremely high. The OBV is a lot higher than when NEO was at its all-time high of 198$ and this is very promising. Personally I am not all to sure that NEO can move above its all-time high ever again, but OBV is telling a different story.
NEO for now seems to be topping out on the weekly at around 15.40$, but once again the weekly candle is not yet closed by far and it can still change a lot this week. The area of 16.75$ to around 18$ will be a good resistance for NEO and probably will take some time before it can break that. Once it can break 21$ I think it will quickly move towards 30$ and then it will need some consolidation again and further re-accumulation, before moving further upwards. When we look to the downside it will be very important to hold around the 11.66$/11.50$ this week. This would mean that the upper green line of the channel will act as support. If we were to break back inside it, it would mean we saw a fake-out to the upside and then we will most likely see a move down towards the 8.50$ level. However the OBV indicator does not make it likely to happen, so there is more chance of this being a real break-out to the upside.
Here is a daily chart of NEO with the indicator RSI (Relative Strength Index) :
You can see a clear bearish divergence for NEO on the daily chart with price moving higher, while the RSI is moving downwards. Probably we see it playing out right now under our eyes. Today is a red day for a lot of cryptocurrencies and Bitcoin was showing some bearish divergences on smaller time frames as well, so a move downwards is logical. Even Gold is moving down 4% at the time of writing this post and that is quite heavy. NEO can still move back toward the 11.66$ level and hold the upper green channel line as support and then everything is still perfectly fine. It would reset the RSI and will give room to the price moving upwards again.
What I liked on the daily chart was the candle of the second of August 2020. We just broke out for real on the 31st of July and the first of August and the candle of the second of August dropped down inside the channel which would make you believe that it was a fake-out to the upside and that it was going to move further back down, but instead it moved back upwards and closed the day above the channel. This kind of confirmed that price wanted to go further upwards, which it did.
Neo seems to be finally breaking out of its channel, but today is quite a red day for a lot of cryptocurrencies. Do not get discouraged because of this. We might see a general pullback for a lot of cryptos, but this should be once again a buying the dip moment. There has been big news today, because MicroStrategy (a business intelligence company) has bought 250 million worth of Bitcoin. More and more companies and institutions are looking at Bitcoin and even buying it ! This is very encouraging news, so do not get negative or depressed when cryptos are moving down today ! See it as an opportunity to look at your favorite cryptocurrencies to buy in some more if you have the funds. Today I actually bought some BTC, ETH and LINK for longer term holds (couple of years).
This is not financial advise and I am not a financial adviser. Please do your own research and make your own decisions.