EOS Technical Analysis: RSI Signaling Overbought As The Price Is Being Traded Around Key Resistance


Over the course of the last 122 days, the price of EOS has increased by approximately 275% as it came from $1.6482 on Decembers low to $6 area at today’s high. This bullish period might be near completion as the price is getting close to its key horizontal resistance level.

Looking at the daily chart below we can see that the price came near the 0.236 Fibonacci level measured from the all-time, around whose vicinity is the significant horizontal support level which was broken to the downside on 7th of August last year and is now likely serving as resistance. That the level serves as strong resistance was proven by the WXYXZ correction that followed after a breakout and was clearly a retest of it.

As strong resistance was encountered the price got rejected and started declining aggressively, decreasing by around 70% in one go, reaching the $1.64 area in December last year. Now that the price of EOS has managed to come up to the levels from which the downfall was made we are seeing signs of struggle indicated by wicks on the last and recent daily candles.

Relative strength index is signaling overbought conditions as its currently around 83.9%. This isn’t the highest the RSI has been as it reached 89.43% at its highest point when the price made the all-time high for the first and the second time. As this indicator is applied on to the daily chart it’s positioning is to be trusted more then if it was signaling overbought on a lower time frame.

The indicators evaluation could stay above 80% for some time as it did the last couple of times but it provides a clear indication that the uptrend has almost ended, especially considering that it always peeks twice before the downtrend starts.

Zooming into the 4-hour chart, we can see that the wave structure also implies that the upward movement is over is near completion as I have counted the 5 sub-wave of the last upward movement. The price has increased in a five-wave manner both on a Minor count and on a lower degree Minute count. There is still more room to go potentially, as of the proximity of the 0.236 Fibonacci level whos interaction we could see before the end of the increase.

This interaction with the significant resistance area is expected to end as a rejection with the price starting to move to the downside very soon. The expected downside movement could be the 4th wave of the Minute count if we haven’t seen the development of the 5th wave and instead, the last increase from last Friday is the part of the corrective structure constitution of the 4th wave in which case only a minor retracement would occur before another final higher high.

The other and more likely possibility is that the price is going to continue increasing further to the 0.236 Fibonacci level which is in price terms around $6.27 which would validate the completion of the 5th wave as I can currently see a three-wave structure which could be corrective as previously stated. If this is true then the expected downside movement would be the start of another larger downtrend that is set to push the price back down to some of the significant support levels.

Pivot points 

S3 1.3218
S2 2.6402
S1 3.4455
P 3.9586
R1 4.7639
R2 5.2770
R3 6.5954

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