$NVTS showing technical strength into Q4.$NVTS:1W
Small cap semi-conductor company and Seeking Alpha darling NASDAQ:NVTS is showing signs of strength, holding the 0.5 Retrace with a bullish outside bar on the weekly time frame.
For NASDAQ:NVTS to breakout from the downward wedge being formed on the weekly chart, I would need to see strong consolidation above the 1.382 (9.12) price level and for an extended period of time (4-6 weeks)
After a prolonged and recent selloff, I believe market clarity stemming from the ‘fog of war’ will provide a catalyst for NASDAQ:NVTS to reclaim the 1 Ret (7.46) which is roughly 20% higher than the current price at time of publication. It is also quite possible that this could be the beginning of a longer cycle 3rd wave on the weekly time frame.
The technical risks that I see here are the bearish price to RSI divergence (dotted trend lines) that is emerging on the 1 week time frame. This comes on the heels of the recent rally in price that came directly after a bullish price to RSI divergence (solid bottom trend lines) and provides me an element of technical confliction in the analysis that warrants caution. As a result, I’m cautiously bullish here with a minimum price target of 7.46 and a secondary target of 9.12 before the end of the year.
Not financial Advice. All stocks can go to zero.
Nvts
Dynamic Range NVT Signal for Long-term Bitcoin ValuationABOUT DYNAMIC RANGE NVT SIGNAL
NVT Signal (Credit: woobull.com) is akin to a "PE" ratio for Bitcoin, and can be used to identify when Bitcoin is overbought or oversold based on the relative value of transactions sent across the network.
This indicator includes a 2 year moving average and standard deviation to identify outlier values, instead of declaring a static high-low range for relative valuation.
THEORY
A dynamic "high-low" range was chosen for the following reasons:
- Bitcoin is only 10 years old, it is likely that relatively "high" and relatively "low" NVT values will change with time, as have PE ratios over the last century.
- Some transactions are now made off-chain (eg. Liquid Network's private side-chain which is used by many major exchanges). If this trend continues, we can expect "normal" NVT ranges to increase with time (as the relative portion of public on-chain transaction values decreases).
CALCULATION
- NVT = Circulating Market Cap / 90 average On-chain Transaction Value*
- Overbought (default): NVT > 2-year mean + 2*standard deviations. I.e. NVT Signal is in the top 2.5% of values for the prior 2 years.
- Oversold (default) NVT < 2-year mean.**
*Data source: Blockchain.info, estimated transaction value does not include returned to sender as change.
**Oversold under 2-year mean was chosen due to the skewness of NVT Signal, it is not quite normally distributed. For example: NVT Signal has never been less than the 2-year mean - 2* standard deviations. This may change in the future.
NOTES ON USAGE
- Use with care. Bitcoin can remain "overbought" or "oversold" for extended periods (eg. 2015-2016).
- As Bitcoin ages, the validity of NVT Signal will need to be monitored. Particularly with respect to potentially increasing use of side-chains, private transactions and potentially the lightning network.
- It is likely that a 2-year “look back period” for calculating mean and standard deviation will not be sufficient in the decades to come. As Bitcoin matures and stabilizes (some time in the future), a longer "look back period" should probably be used. To allow for this, the defaults for this indicator can be easily adjusted.