EOS can regain bullish control only if…

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

After the 7 September sell-off, EOS looked to restore some of its lost ground. However, a bearish pattern was spotted on its 4-hour charts and this triggered yet another breakdown. Before EOS is able to enforce another recovery attempt, the price can be expected to stabilize within a tight channel going forward.

A few support lines can be called into action if another sell-off is observed across the broader market. At the time of writing, EOS was trading at $4.62, down by 3.7% over the last 24 hours.

EOS 4-hour Chart

Source: EOS/USD, TradingView

Market momentum shifted back to the sellers after EOS dipped below its 20-SMA (red) on the back of a bear flag breakdown. As buyers look to invigorate momentum, the channel between $4.65-4.8 would be of particular significance. Moreover, the market seemed to be becoming less volatile, according to the Bollinger Bands, which hinted at a period of consolidation.

In case of a southbound push, support can be found at the 9 August swing low of $4.15. Any further drawdowns would lead to excessive bleeding. On the contrary, a push above 20-SMA (red) would be required to assume bullish control.

A close above 10 September’s swing high of $5.05 would be the best-case outcome and the move would also bring the 200-SMA (green) into play.

Reasoning 

While EOS registered two green candles over the past couple of sessions, the indicators held their bearish positions. The RSI was trading below 40 and EOS will remain vulnerable to losses till this index climbs above 50-55.

Meanwhile, the MACD did shift slightly higher from multi-month lows, but the same was well below the half-line. On the plus side, the signal and fast-moving lines were intertwined as some equilibrium was maintained across the market.

Finally, the Aroon up crossed below the Aroon down, signifying that traders should exit their positions as the likelihood of further dips remains high.

Conclusion 

EOS can be expected to settle between $4.65-$4.8 over the near term as trading volumes and volatility take a back seat. However, the market seemed to be more vulnerable to losses than a bullish resurgence.

In case of another decline, focus should be on the important support line of $5.05.