Trade Recommendation: EOS

The EOS/US Dollar pair started to look bearish on May 11, 2018 when it broke support of $16.00. This ignited a selling frenzy as those who bought above the breakout of $16.00 from April 27 to May 10 rushed to cut their losses. The false breakout triggered numerous stop losses as the pair plummeted as fast as it rose.

However, this drop gives us both bad and good news. The bad news is it appears that the move down is not yet over. The good news is that it won’t be long until the bottom is in place.

Technical analysis show that EOS/US Dollar has created a series of bearish flag continuation patterns on the daily chart. The first flag drove the pair down to $9.0887 on June 13. The second flag pushed the pair down to $6.8926 on June 24. Currently, EOS/USD is creating a third flag that may trigger a move to support of $4.50.

Moreover, consolidation periods or the flag formation appears to be shorter after each breakout. Consolidation in the second flag is significantly shorter than the consolidation of the first flag. The same can be expected between the consolidation periods of the third and second flag. This means that a breakout from the third flag can happen in the next few days.

More importantly, a breakout from the third flag may signal the end of the bear run. After this breakout, bears would most likely be exhausted. This is supported by the daily RSI, which is hovering close to oversold levels. The expected move down should drive the RSI to oversold conditions.

The strategy is to wait and buy as close to support of $4.50 as possible. Should bulls hold on to this key support, they will likely create a base before climbing to our target of $8.00.

The process may take a month.

Daily Chart of EOS/USD on Bitfinex

As of this writing, the EOS/US Dollar pair is trading at $8.0406 on Bitfinex.

Summary of Strategy

Buy: Buy as close to $4.50 as possible.

Target: $8.00

Stop: $4.30


Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.