Neo (NEO) Technical Analysis: Huge Bullish Potential on 1D and 4H Charts, But Will it Break Out?

NEO will be happy to put 2018 behind it after a devastating year of poor market performance and increased Chinese regulations surrounding cryptocurrencies left NEO down -96% from its all-time high by year-end. Hoping to start 2019 on a better footing, the NEO team appears to have coordinated a number of new update releases recently to help rekindle investor and developer support going into Q1.

NEO founder, Da Hongfei, has taken to his dormant twitter page to post a message of much-needed encouragement to the community, promising to,

‘Improve infrastructure… focus on...distributed storage, layer2, to improve NEO’s crypto-economics, and to deliver the best developer experience.’

NEO’s core developer, Erik Zhang, has also made an appearance on Twitter today to announce that,

‘After half a year of development, the improved NEO consensus algorithm dBFT is about to be completed. dBFT will become the best consensus mechanism for blockchains.’

The NEO team has also recently announced that it would be hosting a NEO DevCon event in Seattle on February 16-17 to engage new developers in the ecosystem and re-stimulate dApp development on the NEO blockchain.

So far these updates have had a positive effect on lifting the NEO community spirit and appear to be having a significant impact on the price action, with a number of highly promising bullish signals beginning to show up over one-day and four-hour candles.

The Story So Far

On the 1D NEO/BTC chart, we can see that the asset has been tracking inside a descending channel since August with oscillations between a downtrending support and resistance. Since April 2018, the asset has been largely dominated by bearish traders whose continued selling pressure recently drove NEO’s value down to a new year low at $5.50.

After hitting this bottom on December 15, NEO finally began to see a return of new bullish support that helped carry the asset back above $8 with a 23% gain over 16 days. From there the asset ran into the descending channel resistance for the fourth time and it failed again to overcome it.

This new surge of bullish momentum however, has helped NEO to re-establish a historically key support along the 198,967 Sats level. This critical level has played an important role for NEO going as far back as June 2017, and allowed bulls to recover from a heavy bear market on December 7, 2018, before the asset soared to its all-time high a month later. This support will likely be a vital level for NEO again as it attempts to break out of the four-month-long channel pattern.

Bullish Signals

1.The first promising signal we can see on the 1D NEO/BTC chart is a bullish pennant pattern forming as the price action presses against the downtrending resistance. These patterns often break out once the candles finish consolidating inside the pinch point.

2. On the 1D MACD indicator, both moving averages have broken bullishly above the signal line for the first time since April 2018, with the 12MA high above the 26MA. This is a good sign that buying momentum is increasing.

3. On the 1D Ichimoku indicator, it can be seen that candles are now starting to climb into the resisting kumo cloud - again, for the first time since April 2018 - with a bullish T/K crossover. If NEO closes above this resisting cloud it will be a very strong signal that a bullish reversal is underway.

4. Next, we have a golden crossover between the 50 and 200 EMA lines on the 4hr NEO/BTC chart. This is another very positive bullish reversal signal and suggests that a strong uptrend is likely as long as the two lines remain bifurcated.

From these signals, it looks very likely that NEO will start to bullishly reverse, provided it is able to break through the downtrending channel resistance soon. Once we have that confirmation, we would also like to see candles close above the 1D resisting kumo on the Ichimoku indicator to further support this idea.

NEO Price Targets

Figuring out how far NEO could run, if the bullish reversal takes places, is difficult. In the last eight months, we have not seen a great deal of investor confidence nor support behind this project, which is one of the reasons it has declined so much since the start of 2018. In order to make any sort of strong recovery, NEO will need to reinstall trust and confidence in its community as well as show other investors its future potential.

All ROIs are calculated from the asset’s current value at 200,048 Sats.

R1: 218,047 Sats (9.47% ROI)
R2: 238,332 Sats (19.14% ROI)
R3: 263,397 Sats (31.67% ROI)