CarbiArbittrage
Long

EOSUSD 12 Hour Chart - 60 Days Past & Future.

BITFINEX:EOSUSD   EOS / Dollar
Overall Summary:

Overall the last 60 days (from the 15th of December to the 15th of February) were neutral to bullish and I am bullish for the next 7 days. It is worth noting, that the market sentiment has driven the bullish price action in the last 7 days, rather than specific price action worthy news from the security itself.

Detailed Summary:

This chart uses 12-hour Heikin Ashi Candlesticks with a custom trend bar indicator, Bollinger Bands , 4 MAs (20, 50, 100 & 200), RSI & MACD .

Heikin Ashi candlesticks are great for trend and swing trading. Heikin Ashi means ‘average’ in Japanese because these candlesticks ‘average out’ price action vs traditional candlesticks that are based on OHLC (Open High Low Close). By averaging out price action this candlestick style reduces ‘noise’ and generates a much smoother chart pattern. This is helpful for trend traders as it is easier to identify the key trend in the market and to ignore smaller price volatility .

During the last two months, the price has ranged by $1.29, opening at $2.66 and closing at $3.65. The price has increased over the period which is a reversal of the long term price trend.

Moving Average are also used on this chart to help identify major areas of S&R and general price trend action. I prefer to use simple Moving Averages on the 12-hour time frame. The 200 MA is red, the 100 MA is orange, the 50 MA is yellow and the 20 MA is green. The choice of colours helps me to read the chart and see if price action is bullish or bearish . For example, if the red is on top and the green is on the bottom, it is clearly bullish . It is also important to note that the longer the Moving Average period, the stronger the support and resistance .

During the last two months the price has flipped the 50 and 100 day from resistance to support, with the 200 confidently pierced in the last week. The key Support area is $1.6 & 2.2 and key Resistance areas are $3 and 5. I forecast in the next week that price will try and test the $5 resistance before a significant retracement to the $3 area.

Bollinger Bands are the two blue bands that ‘wrap’ around the security’s price. The top and bottom are two standard deviations away from the Moving Average. If the market becomes more volatile, the bands widen and vice versa. Historically 90% of the price action occurs with the Bollinger Bands , as the price oscillates around an equilibrium. There it helps us identify where the price is in the oscillating cycle so that we can identify entry/exit points and major price changes (on the 10% chance when price breaks through the Bolling Bands).

During the last two months, the Bollinger Bands have contracted by $0.54 from $1.33 to $0.84. The decrease in the Bollinger Bands width was due to decreased price volatility during that period. The wicks broke through the upper band on 13 12-hour candles, lower band on 13 12-hour candles and stayed within the bands on 94 12-hour candles. I forecast in the next week that the Bollinger Bands will increase and the overall trend is bullish .

Volume is a key indicator that I use to understand past, current and possibly future price action. Unfortunately, a majority of the exchange volume is fake ‘wash’ trading so it is important to rely on data from reliable exchanges like Binance and BitFinex. Volume that supports price recent action helps strengthen my belief in a specific trend.

During this period volume has decreased in convergence with the recent price action until the 8th of February when it has broken out. On a longer-term time frame, the volume is around the 20MA volume line and trending down. I forecast in the next week that the volume will increase and this will support an increase of the price.

The RSI is a popular momentum based oscillator that helps us identify what stage in the security’s oscillation cycle it is most likely at. So after identifying the key market trend, we can then apply the RSI to forecast future moves in price action (in terms of velocity and magnitude). This indicator is useful determining entry and exit points, for trend traders like myself, it is used on longer time frames as it is much more reliable. Most of the significant price action occurs around the 30 and 70 areas and ideally what we are looking for is a divergence between the price action and the RSI .

During the period the RSI decreased touching the 30 line twice before a bullish failure swing. A bullish failure swing is when: RSI drops below 30 (considered oversold), then RSI bounces back above 30, then RSI pulls back but remains above 30 (remains above oversold) and finally the RSI breaks out above its previous high. In the last week the RSI has crossed the 70 line twice and is now heavily outbought at 88, and ATH for the last 6 months.

I forecast in the next week that the RSI will decrease and this indicates a weakening of the uptrend and a consolidation of the price.

The MACD is a popular trend following momentum indicator that can help identify a security’s momentum, trend direction, and duration. is a popular trend momentum indicator that can show us a security's overall trend. The core assumption of this indicator is that a security’s price oscillates around an equilibrium. Therefore by looking at the relationship between different MA calculations, we can identify what specific stage a security may be of its oscillation cycle. This is why we have two lines, the first is called the MACD (26 - 12 MA) and the second is called a Signal line (9 MA). We also have a Histogram (MACD-Signal Line), which is the 1st thing I look at. Finally, there is the Zero line, which is basically when the 26 and the 12 MA are equal. The MACD , that combines several indicators, is worth watching when one or more of the following happens: crossovers (MACD/Signal/Histogram and Zero line), convergences/divergences between price and rapid changes.

During this period the MACD the line crossed below the Signal line (on the 25th of December) which was a bearish trend . The MACD then the line crossed below the Zero line (on the 12th of January) which was a bearish trend in convergence with the price consolidation. The MACD oscillated around the zero line for several weeks of price consolidation. But on the 8th of February the MACD crossed both the Signal line and the Zero line rapidly and has since approached 6 month ATHs.

I forecast in the next week that the MACD will decrease and this indicates a weakening of the uptrend and consolidation of the price.

References:
Heikin Ashi summary - https://www.investopedia.com/trading/hei...
Moving Average summary - https://www.investopedia.com/terms/m/mov...
Support and Resistance summary - https://www.investopedia.com/trading/sup...
Bollinger Bands summary - https://www.investopedia.com/terms/b/bol...
Fake exchange volume summary - https://www.blockchaintransparency.org/
RSI summary - https://www.investopedia.com/terms/r/rsi...
MACD concise summary - https://www.investopedia.com/terms/m/mac...


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