EOS was previously consolidating inside a symmetrical triangle with its higher lows and lower highs. Price has since broken below support to signal that a downtrend is due and has also confirmed a bearish flag continuation pattern.
The mast of the flag spans 4.500 to around 5.500 so the next leg lower could be of the same height. Meanwhile, the triangle spans 4.500 to around 6.700 so the resulting downtrend could last by the same size.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. This suggests that the selloff is more likely to gain traction than to reverse. Volume remains elevated after all, so another big move could be in the works.
Stochastic is already indicating oversold conditions, though, so sellers might need to pause from the latest dive to let buyers take over. In that case, a pullback to the area of interest at 4.500 could be possible or even up to the broken triangle bottom. Note that this is in line with the moving averages’ dynamic inflection points that add to its strength as a ceiling.
EOS and its peers have been in free fall since late last week as a number of bearish factors came up. First off, the uncertainty stemming from the “mining war” in the Bitcoin Cash hard fork has loomed like a dark cloud over other altcoins as investors worried that the same issue could arise for these later on.
Apart from that, the SEC made an announcement regarding some ICO operators in violation of securities laws, spooking investors into moving some funds away from crypto for fear of tighter regulation. This also dampened hopes for a bitcoin ETF approval, serving as a setback for the entire industry.
To top it all off, risk aversion has been in play in general financial markets so traders aren’t in the mood to take on higher-yielding assets.