Analysis provided by Ashton Fraser, learn more about his trading strategies with the forex reversal indicator.
After Peercoin's sudden drop this morning, indeed a fall of more than 10% in barely a couple of hours (ouch), we're now seeing some ranging between two important levels.
Let's take a closer look at the PPC/USD M30 chart below:
I've performed the Fibonacci study from the high of today at 2.930 until the low of today at 2.611. Pay attention to where price stopped, i.e. 2.611. I've circled in blue on the far left of the chart the first instance of price reaching this point, yesterday at around midday UK time.
This is a very important area, purely because it represents not only the low of yesterday, but rather the low of this year. This fact on its own makes it a potentially strong support line, and this proved to be the case, because today price tested and bounced off 2.611 on two occasions, virtually to the pip. As a general rule, a yearly high/low is a very strong area of support and resistance.
Consequently, the bounces themselves were strong and forthright, as after each of the two tests of 2.611, price bounced straight back up to the 38.2% Fibonacci retracement level at 2.733.
PPC/USD has actually just tested 38.2% again, for a third time within the past hour (marked in red). The market seems to have settled for the time being, but no doubt there's going to be some more crazy price action in the days ahead. It's possible that price may break 38.2% at 2.73, since right now, the Accelerator and Awesome Oscillators are green, whilst the Stochastics are underbought and heading north, although if this break does occur today, I still expect 50% at 2.77 to remain firm.
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