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EOS Price Analysis – Weekly Technical Analysis September 20

EOS is a cryptocurrency asset which powers the EOS.IO blockchain. After experiencing a tremendous boost in share price from March to May 2018, it has suffered losses since then, sending the crypto price down to its March 2018 levels.

So what is the outlook for EOS/USD heading into the third week of September 2018?

Fundamental Outlook

EOS is looking to deepen its presence in the market and in this regard, Bitfinex has announced plans to launch a decentralized exchange that will feature several EOS pairs. This exchange, which is built on the EOSIO blockchain, is expected to commence operations in December. Furthermore, an Ethereum Dapp known as Bancor is expanding into EOS blockchain so as to provide clients with free and fast transactions. The new product to be known as BancorX, will permit trading between crypto tokens that are based on the EOS blockchain. BancorX will also allow trading between ERC20 tokens and EOS-based tokens.

On September 18, 2018, hackers were able to steal $58,000 worth of tokens by creating fake EOS tokens, and using them to purchase three other tokens on the Newdex exchange. These tokens were then used to purchase real EOS tokens, which were then traced to another exchange. This news did not severely impact the EOS share price, because the source of the vulnerability was traced to the exchange and not the token itself.

Technical Outlook

The technical outlook for EOS will focus on the weekly chart of the EOS/USD. This chart shows that price action is trading within narrow ranges.

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EOS/USD Weekly Chart: September 18, 2018

As has been seen with some of the top 10 cryptos, price action is locked between a horizontal support below and a descending trendline resistance line above the price action. These borders have formed a descending triangle. The price action candle for the week has opened on a bearish note, pushing hard against the purple support line at $4.8697. Below this area, the next support level is seen at $4.7606. This represents the next price target if the current weekly candle closes below the current support line.

EOS/USD is trading within very narrow ranges. The support level is under pressure at the moment. It should also be noted that the price action is very close to the apex of the descending triangle. This will have notable implications on price action in the next few weeks.

So here are the trade scenarios.

Scenario 1

The descending triangle pattern usually resolves with a downside breakout of the lower border of the triangle. This manifests as the price candle breaking and closing below the support level. This is the first expected scenario for EOS/USD. With the support level under severe pressure at the moment, this move may occur sooner than expected, considering that price action is already very close to the point of convergence of the support and resistance lines.

This move would need to be accompanied by an increase in selling volume. The price candle must close below the support line by a 3% penetration factor for the breakout to be considered valid.

Scenario 2

It is also possible that price action will continue to remain within the range, for at least two more weeks. We will therefore see price action candles bouncing from support and getting rejected at resistance. This will provide opportunities to buy at support and sell at the resistance, with entries being made on the shorter time frame charts.

Scenario 3

Then of course, there is the possibility that prices will break out upwards, but this only happens if there is a news item surrounding EOS that causes buying demand that is strong enough to negate the technical plays. At the moment, we do not have this in the market but things can change in an instant. In the crypto markets, there are no schedules for news releases as is found in forex with the economic news calendar. Therefore, news releases are unannounced and can have sudden and massive impact. So never discount the possibility of a news release for EOS with bullish impact.

Market sentiment:

  • Long term: bearish
  • Medium term: neutral
  • Short term: neutral

Points to Note:

Price moves on a weekly chart generally take time to evolve. A single candle forms in a week, and it may take several candles for price objectives to be attained. Patience in waiting out any of the possible price scenarios is a requirement for trading the weekly charts.

 

Eno is an Associate Member of the UK Society of Technical Analysts (STA). He writes about the financial markets and the technology behind the markets. His articles can be seen on several forex blogs and broker educational websites.

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