Holy Coinciding Variables on EOS - Potential Major Reversal
Updated
I haven't posted on here in over a couple of years but I had to make one before this plays out (it's flirting with a breakout right now). I believe that this main chart and the following charts (just as, if not more, important) build a very strong case for a potential major reversal on EOS, with both the USD and BTC charts looking extremely promising.
Main Chart - EOS/USD has been in a downtrend since May of 2018. This is shown here by the downtrend line on the weekly chart. This is a very big formation that should result in a big eventual move once broken (I won't be looking to take any profit until at least $5). EOS is currently breaking out of this and will have its first daily close breakout confirmation if we can stay above ~$3.36. A potential breakout is further supported by the that we just broke above a critical support area at $2.98 after coming off of a MASSIVE long term double bottom.
Something to note though is that this is on the linear scale, we'll surely meet some resistance when we hit the downtrend line on the log scale, at roughly $4.
Chart 2 - Looking at the last few months on EOS/BTC, you can see that EOS set a low and then a lower low, but both the RSI and the MACD set higher lows. A divergence like this means there's been an increase in buying as we've gone lower in price, suggesting a reversal. On even the 4h or the daily this would be highly significant, but I can't remember seeing such strong divergence on the weekly timescale. Huge.
Chart 3 - EOS/USD just hopped up above the 200 daily MA shown here (highest of 3) and has backtested and held. It's also broken above and held the 300 and 365 daily MAs if you trade those (not shown in image). And I know it's a lagging indicator (but people still care about it), but it also just had a golden cross with the 50 breaking above the 100 day MA.
Chart 4 - I discussed EOS/USD being at extremely strong support, but EOS/BTC also happens to be as well.It is currently sitting just above the all time support that it broke above and then had to backtest in December 2017 before making its parabolic runup. Extremely significant support area to be holding above.
Chart 5 - A little bit of icing on the cake - The EOS/USD weekly has its bollinger bands more contracted than they've been in history, suggesting a very high level of volatility is incoming and that a strong move in one direction or the other is building.
Additional Analysis:
All of these bullish charts should go in combination with the fact that we're coming off of the highest monthly, weekly, and now daily closes on total crypto marketcap since May 2018 and are poised to continue upwards.
But specifically I'm bullish on swing trades right now for this class of coin, as the protocol coins are looking more and more attractive. ETH of course has been leading with a massive breakout, but other coins look great as well. For example NEO just made a major breakout, ADA looks set for a major longterm reversal, and now EOS. Even though it looks poised to continue its breakout, with the insane rise in gas prices for ETH (they're only gonna keep going up) and the uncertainty surrounding the release of Ethereum 2.0, it would make sense for some money to also begin flowing into the other protocol coins (look at how well DOT is doing and all of its hype).
Because of their bad leadership problems and press, people have tossed EOS aside and forgotten that it could possibly compete. This is while it can process 20x the # of transactions of ETH, has only 23% less daily active users, and is also in 2nd place (way ahead of #3) in total # of dApps and contracts. I could see people thinking that EOS at these prices could be an excellent hedge against the uncertainty surrounding ETH (it's also ~6% of ETH marketcap).
This is still totally meant to be a trading/TA post, but I think that (in this case especially) doing a bit more with some fundamental analysis can help support and even explain the TA and why a major reversal could be coming.
Thanks for reading! Please let me know what you think.
Main Chart - EOS/USD has been in a downtrend since May of 2018. This is shown here by the downtrend line on the weekly chart. This is a very big formation that should result in a big eventual move once broken (I won't be looking to take any profit until at least $5). EOS is currently breaking out of this and will have its first daily close breakout confirmation if we can stay above ~$3.36. A potential breakout is further supported by the that we just broke above a critical support area at $2.98 after coming off of a MASSIVE long term double bottom.
Something to note though is that this is on the linear scale, we'll surely meet some resistance when we hit the downtrend line on the log scale, at roughly $4.
Chart 2 - Looking at the last few months on EOS/BTC, you can see that EOS set a low and then a lower low, but both the RSI and the MACD set higher lows. A divergence like this means there's been an increase in buying as we've gone lower in price, suggesting a reversal. On even the 4h or the daily this would be highly significant, but I can't remember seeing such strong divergence on the weekly timescale. Huge.
Chart 3 - EOS/USD just hopped up above the 200 daily MA shown here (highest of 3) and has backtested and held. It's also broken above and held the 300 and 365 daily MAs if you trade those (not shown in image). And I know it's a lagging indicator (but people still care about it), but it also just had a golden cross with the 50 breaking above the 100 day MA.
Chart 4 - I discussed EOS/USD being at extremely strong support, but EOS/BTC also happens to be as well.It is currently sitting just above the all time support that it broke above and then had to backtest in December 2017 before making its parabolic runup. Extremely significant support area to be holding above.
Chart 5 - A little bit of icing on the cake - The EOS/USD weekly has its bollinger bands more contracted than they've been in history, suggesting a very high level of volatility is incoming and that a strong move in one direction or the other is building.
Additional Analysis:
All of these bullish charts should go in combination with the fact that we're coming off of the highest monthly, weekly, and now daily closes on total crypto marketcap since May 2018 and are poised to continue upwards.
But specifically I'm bullish on swing trades right now for this class of coin, as the protocol coins are looking more and more attractive. ETH of course has been leading with a massive breakout, but other coins look great as well. For example NEO just made a major breakout, ADA looks set for a major longterm reversal, and now EOS. Even though it looks poised to continue its breakout, with the insane rise in gas prices for ETH (they're only gonna keep going up) and the uncertainty surrounding the release of Ethereum 2.0, it would make sense for some money to also begin flowing into the other protocol coins (look at how well DOT is doing and all of its hype).
Because of their bad leadership problems and press, people have tossed EOS aside and forgotten that it could possibly compete. This is while it can process 20x the # of transactions of ETH, has only 23% less daily active users, and is also in 2nd place (way ahead of #3) in total # of dApps and contracts. I could see people thinking that EOS at these prices could be an excellent hedge against the uncertainty surrounding ETH (it's also ~6% of ETH marketcap).
This is still totally meant to be a trading/TA post, but I think that (in this case especially) doing a bit more with some fundamental analysis can help support and even explain the TA and why a major reversal could be coming.
Thanks for reading! Please let me know what you think.
Note
And as for my plan for entry on this - I'm looking for a daily close on a breakout of the downtrend line and then a backtest to confirm the breakout. Ideally we can get a weekly close on Sunday outside of the down trend line and then enter after a backtest has held or on a backtest if it's looking strong.Note
If we don't breakout soon here (and we set this as the swing high) then we will have fairly strong bearish divergence formed on the daily for both RSI and MACD. This would suggest a pullback (and healthy backtest of the breakout) and could be a good spot for an entry if it plays out.
Note
^What I talked about there ended up playing out. We hit and were rejected by the downtrend line on the log scale as I talked about in the beginning of my post. But as you can see in the image below, we're now backtesting the original breakout of the downtrend line on the linear scale. This could be a fairly low risk spot for an entry.Note
Surprised I didn't notice this, but the EOSBTC pair is currently in a massive falling wedge dating back to 2018 (bullish pattern).
I'm going to be layering into the rest of my position on breakouts of this wedge as well as a breakout of the downtrendline on the logarithmic scale (below).
This is a swing trade for a major reversal, so please remember this could take a bit time to play out.
Note
Alt coin trades can be very dependent on BTC's movements.
BTC had a lot of sell side pressure this week and tested lower prices, pushing down EOS as we crashed down back under the downtrend line we broke out of, closing below it on the daily. However we closed exactly at the $2.98 support line I had drawn on the chart and now are looking strong again back above the downtrend line.
I'm still only at 1/4 of my planned entry size and am going to wait to add more (unless big volatility comes in of course) until after the weekly close and, more importantly, the monthly close next Monday. Even if we can't close the week green (above ~ $11,650), the monthly candle is looking extremely bullish and a green close (above ~ $11,380) will paint a beautiful, healthy candle showing a backtest after a breakout before hopefully moving to higher prices.
Will layer in another 1/4 position if we get a healthy monthly close, 1/4 on a EOS/BTC falling wedge breakout, and on a breakout on the EOS/USD logarithmic of the downtrend line.
If we close $2.93 or lower I will close my position.
Note
Sorry I realized I never gave a final update on this. Like I said I ended up exiting my position after a bearish daily close. It's now fallen back below the downtrend line it broke out of. I'm not saying that it won't eventually succeed and make a major reversal, but I'm keeping my capital out of it for the time being.Given such awful performance with so many bullish variables I'm not really interested in getting back in. It really seems like market sentiment is killing the coin. If I were to re-enter I would definitely wait for a confirmed breakout above the downtrend line on the logarithmic (!) scale. If we keep moving down in price, then an entry around the big support at (or just below) $2 is also an enticing entry if you want to buy in before it breaks out (or if you want to buy for the longterm).
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