False Base broken - now heading below $2, page-563

Hi Moneymaker

On both a daily and weekly chart the stock is extremely oversold on momentum, has only been more oversold 2 times previously. Though as you can see just hitting 30 on the RSI doesn't rule out going a little lower in the short term.



Previous time was late 2016/early 2017 when it was consolidating the start of its early accumulation phase.


An initial oversold momentum usually sees a bounce but can often be followed by a lower low on price which makes a higher low on the relative strength momentum because the RSI tracks the relative strength of the movement - a move lower but on weaker momentum than the first fall shows up as a higher low on the RSI and is considered a buy signal as bullish momentum divergence indicates that the selling pressure is losing strength.

You can see the same momentum divergence occured on an intraday basis for NEA today which is why it ended up making a lower price when it was already the most oversold at the start of the day (and even divergence showed up during the final part of the selling from 3-3.30.

High volume of buying came in after the 3.30 selling climax but it didn't move the price a lot meaning still a lot of supply available - buyers bought like 6-7 million stocks and only increased the price 6 cents. Still means theres a lot of selling pressure. This is more of a guess but I feel like the selling pressure today was too strong so that a likely set up that could occur is that tomorrow there is the possibility for another slightly lower low along the demand trend line to occur to wash out some more sellers - this however would be on bullish divergence again and so likely to see buying occur off it. Ultimately though eventually a buying reaction should occur eventually.