Nick Chong · 6 days ago · 2 min read · Insights via Grayscale Investments
EOS, XLM, ADA, and TRX are showing signs of liftoff
Disclaimer: This article contains technical analysis, which is a methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. The content presented in this article is the opinion of the author. None of the information you read on CryptoSlate should be taken as investment advice. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own diligence and consult with a financial advisor before making any investment decisions.
Bitcoin’s surge above $9,000 diverted investor attention away from altcoins with most coins relative to BTC experiencing single-digit losses. This technical analysis will explore whether EOS, Stellar, Cardano, and TRON are preparing for an upswing when interest returns to the market.
Support and resistance levels use historical data to identify the price points that act as barriers in a bearish or bullish moves, pausing the continuation of a trend due to unusually high supply or demand.
On the 1-week chart, EOS is trading above the $6.92 support level. A break below this price could take the cryptocurrency down to $6.00 while a bullish impulse could reach the next resistance levels at $7.75, $9.00, $10.50, or $12.50.
EOS is trading inside an ascending parallel channel that has contained the price action since Dec. 18, 2018, on the 3-day chart. The coin has been making higher highs and higher lows, which characterize this technical pattern.
Now, that it has reached the bottom of the channel and bounced off, it could be on its way back to the middle of the channel where it could find some resistance. If the buying pressure increases, EOS could reach the top of the channel to make a new yearly high.
On the 1-day chart, this cryptocurrency looks bullish since the 50-day moving average was able to hold it from a further decline. And, the crypto managed to get back on top of the 7-day moving average for the last 5 days.
A golden cross could happen in the next couple of days, when, and if, the 7-day MA moves above the 30-day MA. Since this is a bullish breakout pattern it will add credibility to the bullishness seen on this timeframe, if validated.
Stellar could soon experience a strong upswing since most long to mid-term time frames are showing bullish patterns.
On the 1-week chart, for instance, a golden cross between the 7 and 30-week moving average developed two weeks ago, and XLM is currently trading above the 7-week moving average, both bullish signals. A push up to the 50-week MA could be expected.
Nonetheless, if selling pressures rises and XLM moves below the 7-week MA, then it would probably try to test the 30-week moving average.
An inverse head-and-shoulder pattern formed on the 3-day chart predicting a bearish to a bullish trend reversal. A move above resistance, also known as the neckline, could signal a sharp upswing which will need to be confirmed by a large spike in volume that will help validate that the pattern is actually a breakout.
This technical formation projects a 47 percent profit target that is obtained by measuring the distance between the head and the neckline and adding it to the breakout point. A move below $0.120 could give the first signs that the head-and-shoulders pattern will be invalidated and breaking below the right shoulder will confirm it.
A bull pennant formed on the 1-day chart and could be in its breakout stage. This is considered a continuation pattern that developed after a strong upward movement, known as the flagpole, and was preceded by a consolidation period, known as the pennant. This bullish formation predicts a 45 percent target to the upside that was determined by measuring the height of the flagpole.
Now that XLM seems to be breaking out of the pattern, it could be on its way to reach the target mentioned before. But, if instead, it reverses and moves below $0.116, the bull pennant will be invalidated.
Since the beginning of April, Cardano has been consolidating, mostly between the $0.07 support and the $0.10 resistance level, despite a move down to $0.06 in early May.
Now, ADA is trading around $0.09 indicating that it could soon try to test the $0.10 level of resistance once again. Breaking above this price point could take it up to the next supply barrier sitting at $0.13.
An ascending triangle could be forming on the 3-day chart, based on the price movements that allow for a horizontal line to be drawn along the swing highs, at $0.10, and a rising trendline to be drawn along the swing lows. Although this is a continuation pattern, since the price usually goes in the same direction as the trend before the triangle formed, a breakout can occur to the upside or downside.
If Cardano breaks the $0.10 resistance level with enough volume, it could go as high as $0.135, which is the target given by the bullish formation.
Conversely, a move below the 7-three-day moving average could indicate that ADA is about to fall to around $0.06 depending on the strength of the support provided by the 30 and 50-three day moving averages.
TRON spent most of the year trading within a $0.006 range, between $0.023 and $0.029. Around mid-May, it finally broke out of that trading range to reach the $0.038 resistance level, which rejected the price of TRX and precipitated a retrace to $0.029.
Based on TRON price action on the 1-week chart, it can be presumed that it will trade between $0.029 and $0.038. Therefore, this cryptocurrency could be on its way up to test the $0.038 level of resistance once again, but breaking above this price point could take it up to $0.049.
On the 3-day chart, TRX is trying to move above the 7-three-day moving average, which will confirm the continuation of the bullish trend and a possible test of the $0.038 resistance level.
Failing to trade above the 7-three-day MA could take this cryptocurrency down to the 30 or 50-three day MA.
Despite the reduced price action that the cryptocurrencies previously mentioned have had in respect to Bitcoin, it seems like they are just about to continue the bullish trend and potentially make new yearly highs. It seems like it is just a matter of time before a breakout occurs, and patience will play a key role in profiting from the next upswing.
It is worth noting that since the beginning of the year most of the cryptocurrencies in the space have surged more than 100 percent in value, so there is a nontrivial chance for a major correction. At this point, to minimize risk and exposure, it is wise to wait for confirmation before entering a trade.