A price reversal for EOS will depend on buyers doing this
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
EOS has had to endure strong bouts of selling pressure over the past two weeks, each triggering a 19% sell-off. The most recent fall saw the price disregard a bottom sloping trendline that extended from its July lows. This put the market in danger of a potential bearish trend switch.
On the flip side, the 200-SMA (green) and a possible double bottom formation would invite renewed buying pressure. At the time of writing, EOS was trading at $4.75, down by 3% over the last 24 hours.
EOS 4-hour Chart
Since late July, EOS has traded within a constant uptrend, supported by a respectable bottom trendline. However, sellers restricted gains above the key resistance zone of $5.6-$6 on two occasions, resulting in a drastic loss of value.
Short-sellers were front and center once again after EOS dipped below its lower trendline and mid-term SMAs (not shown). The 4-hour 200-SMA was the last defensive resort for bulls to offer an immediate fightback. Further bullish sentiment would also be injected by a double bottom setup which worked as a reversal pattern.
The 4-hour RSI was still experiencing shockwaves of a symmetrical triangle breakdown last week. The index failed to decisively rise above 60 and traded in bearish territory. However, there were some signs of life as the index bounced back from the oversold zone and pointed north.
A hike above the upper trendline would be an important step for a bullish reversal. Over here, it’s also important to mention that the daily RSI was still above the half-line and did not spill over to the bearish side. Moreover, a fraction of buying pressure was noted on the MACD as the EOS traded at its 200-SMA.
The histogram noted a downtick in bearish momentum as the index looked to recover from monthly lows. Finally, the DMI’s -DI line traded well above the +DI. This suggested that buyers have to make more headwinds to switch the script in their favor.
There was evidence to suggest that EOS will bounce back from its 4-hour 200-SMA (green) and a double bottom setup. A green candle seemed to be forming and buyers need to capitalize on this over the coming sessions.
If the price continues to move north, the $5-mark will be the next test. Conversely, an extended decline would push EOS all the way towards $4.4 before a price reversal is initiated.