STEEM is retracing through a significant support zone and currently testing trend line support. In a previous post, I coined the acronym "PATHWR" (Previous All Time High Wick Range), but the more I thought about the naming convention, I realized the terminology was slightly inaccurate.
I want to clarify and re-define these levels so that everyone who reads my posts can follow along and understand my references. For starters, I'm looking at daily candlestick charts ~ each candlestick represents the price action for one day. For more information on candlestick charting, click here.
Upon further review, I've decided to re-coin PATHWR to....
PWSH (Previous Wick Significant High)
The PWSH (Previous Wick Significant High) is defined as a range starting with the highest open or close price and extending up to the highest price of any given "significant" trading peak. Significance is subjective, but I define it typically as the first impulsive move of a trading pattern (e.g. the first wave of a triangle pattern). I've always looked at these zones throughout my trading career, but never had a reason to name these ranges ... until now.
With STEEM's breakout to start the year, a new PWSH (PWSH3) was created. This range is easily identified when looking at the candlestick chart. The lower range is right at $8 and extends up to the ATH of $9.25. I expect PWSH3 to act as resistance when we enter those prices again (hopefully in the near future).
Trendlines
In addition to PWSH (Previous Wick Significant High), I also use trend lines to identify additional levels of support and resistance. Technically, you only need 2 data points to draw a trendline, but the more points the trendline touches, the stronger the trendline. I've drawn 2 trendlines:
- One that connects to the lowest open/close of the trend ("Trend1" labeled on the chart)
- One that connects to the wick low of the trend ("Trend2" labeled on the chart)
Trend1 will be used to as a proverbial "line in the sand" for open and close prices. This trendline can be breached, but prices need to close above the line for the trend to stay in tact. Trend2 is a reference point for the lows, or the wicks of the candlesticks. If price action closes below Trend2 the trend could be broken and we could see further downside.
Ideally, I'd like to see STEEM bounce off Trend1, close above it, and trade back into PWSH1 and eventually breaking through higher. If we close below Trend2, I'll reassess.
