OMG/USD is traded on several exchanges, and presently shows an opportunity that even beginners can benefit from. This is as a result of the identified key levels of support and resistance that are found on the weekly and daily charts. Read on to find out what trade scenarios could result from OMG technical analysis findings in the weeks to come.
The trending news for OMG bordre on the updates provided on October 24 on the development of the Plasma scaling solution. Plasma, which was initially conceptualized by Lightning network co-founder Joseph Poon as well as Vitalik Buterin of Ethereum, enables the creation of several spin-off chains from the main Ethereum blockchain. Each spin-off is capable of handling complex operations, which redirects network off the main chain and makes operations faster.
OmiseGo is presently working on the deployment of the Watcher API on the OmiseGo testnet, as part of its Tesuji Plasma development and deployment. Completion of the integration of Plasma is likely to receive positive feedback from the market.
OMG Technical Analysis
The technical state of OMG is that the price action is presently trading off a support line which connects price lows that extend all the way back to August 2017. This is seen in the chart below as the blue line situated at the $2.98 price level.
OMG/USD Weekly Chart: October 28, 2018
Above this support line, we have another horizontal key price level at the $6.17 mark, which connects price lows that were last seen in the last three months of 2017. This line was broken in September 2018 to the downside, from where price was able to find support at $2.98. Therefore, the long term chart identifies the support at $2.98 and the resistance at $6.14. These key levels are relevant to traders who hold positions in the long term.
Long term traders tend to hold positions for a long time; sometimes for as long as several months. Other traders may not be in a position to wait that long. For these traders, the medium-term charts provide some insight into intervening price action that takes weeks to unravel. You may, therefore, call the medium term charts the package within a bigger package.
OMG/USD Daily Chart: October 28, 2018
The daily chart reveals the following:
- There are several key levels of minor support and resistance which price action will have to overcome, on the way to either the long-term support level of $2.98 or the long-term resistance at $6.14. These are the minor support at $3.46, and two resistance levels seen at $3.79 and $3.82 respectively.
- The resistance area of $3.79 is formed by a role reversal of an earlier support seen in August 2018, followed by a test of the role-reversed resistance line earlier in October 2018.
- The resistance of $3.82 is formed by several previous highs of September 2018 (red line). A single test of this price area occurred in October 2018 as well.
So what are the possible trade scenarios for traders wishing to trade the OMG/USD crypto pair?
Trade Scenario 1
Price action is already very close to the $2.98 support line. One scenario will be for price action to retreat to this area to test this support line once more. To do this, price will, of course, have to breach the minor support at $3.46 on its way there. If the long-term support of $2.98 holds firm and is not broken, then price will make a bounce to retest the $3.46, $3.79 and $3.82 price levels, in that order. These retests will occur within the context of the long-term price move from the $2.98 support to the $6.14 price level.
There has to be an increase in buying volumes for the price bounce to take out all these levels and aim for the long-term resistance target.
Trade Scenario 2
It is also likely that price action will continue to be tepid, and trade within the confines of the minor support and resistance levels seen on the daily chart. In particular, the $3.46 price level may continue to hold up as the minor support and the $3.79/$3.82 price levels will continue to remain firm as resistance areas.
This scenario will set up a perfect opportunity for range trades between the support and resistance price areas. If properly traded, range-trades can be very profitable.
The long-term and mid-term outlook of the OMG/USD pair is:
- Long-Term – neutral to bearish
- Mid-term – neutral to bearish
Please note: this analysis was done on the weekly chart, and therefore the price moves may take several weeks to play out.
You can learn more about OmiseGO (beyond OMG technical analysis) in our full guide here. And if you’re interested in more analysis on OMG price, you can see reasons for optimism in the project in this guide.
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.