TA & TRADING - NEO February 14th

I haven't looked at NEO in a while. I was actually waiting for it to correct as I will definitely be jumping in when I find a nice entry.

TA (TECHNICAL ANALYSIS)

Here's what the chart says to me:

As you can see I've created almost like a falling wedge pattern, which starts out with some bearish divergence on the RSI. This means that we are seeing higher highs on the chart, but lower lows on the RSI. This tells me that there's some indecision and we need to make some moves as there will be a change in trend soon.

RSI is a great tool to use to your trading advantage. Make sure you chart it just like your candlesticks. We will find support, resistance etc. on the RSI so always look at it, especially longer term charts. If you look closely at where the RSI will find support, it's around the 45 region.

If you look back at the last time we bounced at 45, it was the start of the last uptrend! As an Elliott Wave trader, this says to me that we are almost certainly going into an impulse wave 3 if we bounce at the 45 RSI, as dropping below that would invalidate the wave count, and would mean we are still in our corrective wave. Hope that makes sense!

I'm taking this into account when I'm looking at my Elliott Wave count, which gives me an even stronger signal that we might be going down soon. Plus after the run up NEO had, I would expect a little more of a correction than to the .386 fib level!

I'm looking for a correction to the .5 or the .618 levels (green boxes on my chart), or somewhere in the region of the 55 EMA, which as you can see lines up nicely with the .5 line

TRADING

If I see a nice bounce with some bullish indicators, I'll enter when I see fit. I'm not going near NEO yet as I want to snap it up a little lower.

We're looking to finish our wave 2 correction, so hold tight. NEO will a great buy soon.