EOS: A breach below this level could open the floodgates
Disclaimer: The findings of the following article are the sole opinions of the writer and should not be taken as investment advice
Since the crypto-crash on 19 May, the broader market has been buried under a pile of selling pressure. Back in late June, the market suffered yet another downturn as most alts snapped multi-month lows. Smart contract platform EOS has also been under the pump, although its monthly losses of 20% were consistent when compared to its counterparts – Polkadot, Stellar Lumens, and Ethereum.
At the time of writing, EOS was being traded at $3.9, down by 3.5% over the last 24 hours.
EOS Daily Chart
Despite a slight recovery in the broader market at press time, bullish sentiment failed to impact EOS. Instead, EOS moved south from its 23.6% Fibonacci level ($4.15) – A region that has not been toppled for over two weeks. On the plus side, there was some defense present in the form of a 20 Simple Moving Average line around the $3.8-mark and the Visible Range also showed a high amount of interest for EOS at this level.
In case this area fails to cushion the next wave of selling pressure, the price will find its way back towards the 22 June swing low of $3.06. A close below this low would open the floodgates for an extended decline.
Reasoning
The Relative Strength Index was denied a hike above 50-55 and a move below its lower trendline would indicate further downside in the coming days. Although the Aroon Up (orange) was close to 100%, a crossover below the Aroon Down (blue) could materialize into a downtrend. The On Balance Volume remained subdued at lower levels as selling pressure was yet to dissipate.
The press time lack of volatility would allow EOS to maintain above its 20-SMA for a few more days, but another downturn seemed likely considering the lack of bullish cues. In such a case, the price could move south and towards the $3.06-level before the next rally.
Conclusion
EOS can be projected to fall back towards its 22 June swing low of $3.06 before reversing trajectory. Traders can opt to go long at this support level and exit their trades once EOS snaps the 38.2% Fibonacci level present at $4.8.
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Saif Naqvi, @KhareemSudlow