January Outlook For EOS Cryptocurrency – EOS USD (Cryptocurrency:EOS-USD)

Fibo Quantum

EOS (EOS-USD) is the fifth-largest cryptocurrency by market cap and a major player in the field, especially as an alternative to Ethereum (ETH-USD). Both projects will build a blockchain platform for applications to sit on top of, propelling blockchain and crypto into the hands of adopters. Sitting at a price point of just over $2.50 now, the EOS coin has fallen in value from an all-time high in 2018 of over $21. What will come next?

Fundamental Outlook

The latest news for EOS is comes from the Huobi Group, which plans to open a new EOS-dedicated trading exchange by the first quarter of 2019. This will allow exchange trading of EOS against other assets. This should increase EOS trading volume and potential demand, especially from traders seeking more favorable trading terms from EOS pairs compared to Etheruem (ETH-USD), Bitcoin (BTC-USD), or Tether (USDT-USD) pairs.

Still, critics have pointed out that EOS had several technical challenges in 2018 that have remained unsolved. As EOS apps increase network usage, the team behind the project will need to make sure issues in both the technology and the community have been answered.

Technical Outlook

To the untrained eye, the price chart on EOS/BTC looks a bit confusing, and it may prove to be a trading challenge for beginners. However, it is possible to work around the key levels of support and resistance to produce tradable signals. For instance, the weekly chart below shows two support levels: One at the 0.00053789 BTC level and another at the 0.00068064 BTC level.

EOS/BTC Weekly Chart: December 30, 2018

The blue support line marked “support 2” represents the major support that was last seen in December 2017, April 2018 and the first week of December 2018. The minor support marked “support 1” represents the support levels seen in April and August 2018, with the active price candle for the week presently sitting on this level.

A deeper look at the EOS/BTC pair on the daily chart will highlight the various levels of support and resistance a bit more clearly. We see the areas marked A, B and C being the area that currently works as the support 1 level. This is an area which was a resistance at point A, was broken by price action and is now functioning as a support (points B and C).

EOS BTC daily chart

EOS/BTC Daily Chart: December 30, 2018

Further price action at points D, E and F did not breach the support line to the downside, enabling this area to function as a major support. In the light of this information, what are the possible trade scenarios for traders wishing to trade the EOS/BTC crypto pair?

Trade Scenario 1

In the medium term, the big question is whether price action will continue to find support at current levels or will be breached to the downside. The first scenario assumes that price will break the area marked as “support 1” but will find support at the “support 2” level. This means that the candle for the week must close below the 0.00068064 support line for this to happen, with at least a 3% penetration. This move does not need volume affirmation. Support for this move will come from continued bearishness in the cryptocurrency market.

Trade Scenario 2

If there’s one feature that EOS has displayed in 2018, it’s the ability to do something different from what the rest of the market is doing. So it may yet be possible that while cryptocurrency bearishness is pervasive in the market, EOS/BTC may be doing something different. This view is support by what is currently going on with price around the support area. First, the daily chart will show that the price action for the week ended Dec. 23, 2018, was a long bullish candle, followed by a retracement candle that was the product of this week’s price action. If we look at these two candles as a form of breakout with a pullback to the broken support line, we should see price bouncing off the support at the 0.00068064 BTC price level. An enhancement of the price cluster around the 0.00068064 BTC price area is provided on the four-hour chart, which shows that a bull flag is actually in formation.

EOS BTC 4 Hour chart

EOS/BTC 4-Hour Chart: December 30, 2018

Price action within the flag is still in consolidation. But considering that price entered the consolidation from an upward swing of price, and also considering the fact that flags are essentially consolidation patterns, there’s a strong argument for price to break upwards and chase the next available resistance at the 0.00081500 BTC price level.

Market Sentiment:

The long-term, mid-term and short-term outlook of the EOS/BTC pair is:

  • Long Term – Neutral (price is still in a long term range between the 0.00053789 BTC floor and the 0.00081500 BTC ceiling).
  • Mid-term – Neutral
  • Short-term – Bullish (as a result of the bull flag)

Those who prefer to range trade the EOS/BTC pair can do so in the context of the identified floor and ceiling, while short-term traders can focus on the four-hour chart to decide on their trade possibilities.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.