As mentioned before, week ending January 22 candlestick was slightly over-extended after it closed above the upper BB.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
Despite buyers being in charge as we saw with last week’s follow through, buyers need to make a statement, defy physics and perhaps close above $15 or even $18 if the pent up momentum-after recent obstacles-is strong enough.
The thing is, given the set up especially in lower time frames, EOS traders need a sign and a convincing reason to continue ramping up longs.
The reason for this is simple: our expectation was for last week’s price action to trend within a $3 range defined by the 2nd and 3rd Fibonacci extension levels but do you notice that prices were basically constrained to within the lower half of the range? For buyers to continue inching higher, it is necessary for prices to close above $15 and there is no two way about it. Either that happens or we sell and it is for this same reason why we shall check for entries in the daily chart.
Here, there are two things we should consider and there are high chances that they might even shaper trend direction in the next couple of days. The first is the middle BB line which apparently is our main support line. It was tested in the first half of the week but lower prices were repelled as EOS seemed to have continued with the trend. The second is the January 21 highs. Apparently, EOS prices are still trending within this candle’s high lows.
Besides the constrain, it’s highs is $21 and that is along the main resistance trend line and a potential double or triple tops if prices correct lower today. In my opinion, bears might take charge and correct January 22 over-valuation.
Even though prices moved higher last week, we are now beginning to see the liquidating effect of the minor resistance zone and January 21 highs.
EOS market participants are definitely rejecting higher prices and with that bullish engulfing candlestick pushing prices below the middle BB, I will recommend sells with short term targets of $12.