Here’s when you can set up buy trades if you’re an EOS trader

Here’s when you can set up buy trades if you’re an EOS trader

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

The impetus provided by Bitcoin’s resurgence above $40,000 was critical to the altcoin market. With alts relying heavily on the king coin’s movement since the 19 May market decline, BTC’s rally was definitely a sigh of relief.

EOS, like most of its competitors, rallied on the back of BTC’s uptick. However, failing to stay above a crucial resistance level led to a slight downtick. At the time of writing, EOS was being traded at $3.92 and held the 29th position on CoinMarketCap’s rankings.

EOS 4-hour Chart

EOS’s price reversed from its demand zone of $3.06-$3.28 on 20 July as BTC bounced back from $30,000. An uptrend led to the formation of an ascending channel as EOS flipped its 200-SMA (green) to bullish after a period of 68 days.

However, a crucial breakout above the 23.6% Fibonacci level ($4.15) was immediately met with rejection as EOS dropped below the half-line of its pattern. Focus, at press time, was shifting to the defensive area of $3.80-4.05 and the 200-SMA as a close below this zone would trigger a breakdown from the pattern.

Reasoning

The Relative Strength Index had remained above 50 since 21 July. Alas, it dropped below equilibrium as some weakness seeped into the market. The Directional Movement Index also noted a crossover between the -DI and +DI lines which marked the onset of a bearish trend. A rise in selling pressure was also observed on the OBV which ticked south over the last few sessions.

Conclusion

While bears seemed to be on the cusp of assuming market control, the onus fell towards the support zone of $3.80-$4.05 to cushion incoming losses. Traders can set up buy trades within this area and take-profit at the upper trendline of the pattern ($4.3). However, they must await a rebound confirmation as the market is still vulnerable to an extended decline.

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