• NEO is looking forward to a potentially massive recovery to $25.
  • A descending wedge pattern adds weight to the anticipated bullish case.
  • Support at the 200 SMA and $16 is key to renewing the uptrend.

NEO performed incredibly in September but hit a barrier at $26.  A reversal came into the picture shortly after and NEO has since been hunting for formidable support. Several tentative support areas have now transformed into resistance zones, including $22, $20 and $18. NEO is dancing at $17.1 at the time of writing.

To succeed in China, one must build relationships – NEO’s John Wang

According to the NEO Global Development Ecosystem (NGD) director, John Wang, business growth in China is very different from the West. In the East, organizations and businesses concentrate on developing relationships referred to as guanxi. Reputation elevates the organization and opens the door for collaborations with other business partners.

So, you can be [working on lots of projects] by yourself, but it’s still [like you’re part of a group]. In China, a small team with a new idea, you need to find the right person to talk to and tell them what you want to do. And, if you can convince the key group or person, it will be helpful to help the team.

A breakout is in the offing for NEO

NEO is likely to continue with the downtrend, but not for long. Support anticipated at the 200 Simple Moving Average (SMA)seems strong enough to avert further declines as well as start recovery to $25 as was discussed earlier. However, traders must be aware that this moving average has diligently functioned as support since May.

A descending wedge pattern on the 12-hour chart gives credence to the bullish outlook. The pattern is formed by connecting a series of lowers highs using a trendline. Another trendline is also drawn to connect the lower lows. Descending wedge patterns are characterized by reducing volume and mostly culminate in breakouts on the upside.

For now, the path of least resistance is downwards, especially with the Relative Strength Index (RSI) dropping sharply to the midline. Besides the 200-day support, the buyer congestion at $16 will come in handy in case of extended losses.

NEO/USD 12-hour chart

NEO/USD price chart

Looking at the other side of the fence

It is worth mentioning that the bullish scenario may be sabotaged if the 200 SMA support is broken. Moreover, price action under $16 could stretch the declines to the range between $10 and $10. The seller congestion at $18, $20 and $22 is likely to absorb some of the buying pressure, thereby delaying the uptrend to $25.

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