Trade Recommendation: EOSBTC
CIf we can identify a cryptocurrency that is likely to change its trend from down to up, we can benefit a lot. Such a trade helps us to enter into the position at the beginning of the trend, which can be held on as the uptrend asserts itself. We believe that EOSBTC has changed its trend from down to up and is setting up for a move to the upside.
- EOSBTC is emerging from a downtrend after forming a rounding bottom
- Scale into the position to improve the risk to reward ratio
EOSBTC topped out on July 03 at $0.00235. The subsequent downtrend plunged the cryptocurrency to a low of $0.00008150 by October 23. That is a 96.5% correction within a three and half month period. However, we believe that the digital currency has formed a bottom and is likely on its way up. Let’s see the setup.
EOSBTC has formed a rounding bottom formation in the past month. It broke out of the pattern on November 14. Since then, it has successfully retested the breakout level of $0.00020130. However, it is facing considerable resistance at the $0.00026 levels and is currently close to a critical level, which has a confluence of supports.
The virtual currency is rising in an ascending channel and the trendline support of the channel is close to $0.0002013 levels. At the same level, we have two other supports, the 20-day EMA and the horizontal support.
As three important supports are at the same level, we expect this level to hold.
However, as EOSBTC is still stuck inside a range, we shall scale into the position rather than buy all of it at once.
We suggest buying the first lot (about 40% of your usual allocation) at the current levels of $0.00022845. Though the risk is high, the stop loss is nearby, hence, we end up risking a small amount for larger gains.
We want to add another 30% of the position at $0.000246 when the cryptocurrency bounces from the supports. The final 30% should be purchased on a breakout and close above the overhead resistance of $0.00026 levels. This breakout will confirm the start of a new uptrend. Where is our stop loss and what is our profit objective?
Our stop loss will be placed just below the critical supports, at $0.000195 and our profit objective is $0.0003200.
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