While altcoins continue dropping Bitcoin has increased its dominance over the market, reaching 68 percent for the first time since early 2017. Some prominent members of the industry even predict that BTC will capture 80 percent of the market. This technical analysis will evaluate whether Binance Coin, EOS and Stellar have the potential to rebound despite the larger market trend.
Binance Coin managed to trade above the 7-week moving average for over 6 months invalidating all the bearish signals along the way. Nonetheless, the latest sell signal given by the TD Sequential Indicator in the form of a green nine in mid-June could not be invalidated. Since then, BNB has corrected nearly 39 percent, breaking below the 7-week moving average for the first time since late December.
So far, the selling pressure behind this cryptocurrency has not been strong enough to take it down to the 30 or 50-week moving average. Additionally, last week a hammer candlestick pattern developed. This is a reversal candlestick formation that signals potential capitulation by sellers and a turnaround in the price direction.
A move above the 7-week moving average, based on the 1-week chart, could validate the outlook given by the hammer candlestick pattern and a break above the previous high of $39.60 will confirm that Binance Coin is poised to continue its bull rally and make higher highs.
If BNB is indeed on its way to new yearly highs, the Fibonacci retracement indicator could help identify the different price points that could act as barriers due to the high levels of supply around them. Thus, breaking above the 23.60 percent Fibonacci retracement area that sits around $31.20 could pave the way for Binance Coin to try to test the next levels of resistance around $33.85 and $39.60.
However, if the reversal candlestick formation is invalidated, the selling pressure behind BNB could accelerate with the potential to take this cryptocurrency to at least the 30-week moving average that sits around $21.85. This is exactly where the 50 percent Fibonacci retracement level is, but before reaching it BNB will have to violate the support given by 38.20 percent Fibonacci retracement level.
Following the 458 percent upswing that started in early December 2018, EOS retraced nearly 62 percent after peaking at $8.65 on May 31.
Now that it has reached the 65 percent Fibonacci retracement level on the 1-week chart, a hammer candlestick pattern seems to have been developed last week singling a potential reversal in the direction of the trend from bearish to bullish.
Along the same lines, a buy signal has been given by the TD Sequential Indicator on the 3-day chart predicting a 3 to 12 days correction to the upside. This bullish signal will be validated if there is a green two candlestick trading above a preceding green one candlestick. The upward correction could be targeting the setup trendline that is currently at $6.70, representing a 66 percent surge.
If what can be seen in the bigger timeframes is correct, then a double bottom pattern could be developing in the 1-day chart.
EOS may go as low as $3.30 to form the second bottom and the buy pressure will have to increase significantly around this area to take it back up and break through the resistance around $4.30 and at least reach the next resistance level at $6.
However, if EOS drops down to $3.30 and volume does not pick up, all the bullish signals previously explained could be invalidated and this cryptocurrency may try to test the 78.60 Fibonacci retracement zone around $3 to $2.80.
Stellar has not had a great year in terms of price action due to the extreme volatility that it has gone through.
After the low of Feb. 06, 2019 when XLM reached $0.073, it experienced a 3 months bull rally that took it up to $0.162 on May 16, representing a 120 percent price increase. Since then, this cryptocurrency lost almost all the value that it gained by plummeting to $0.076 on July 17.
Despite the significant pullback that XLM experienced, now it seems like a bullish spinning top candlestick formed last week signaling a potential upward move. This is considered a reversal candlestick pattern that develops at the bottom of a downtrend and has the potential to change the direction of the trend from bearish to bullish.
Although the current weekly candlestick seems to be a bearish candle that could invalidate the bullish formation, it is too early to tell whether this week’s candlestick will end in a bearish or bullish posture.
Nonetheless, a double bottom pattern seems to be developing on the 3-day chart since XLM has gone down to nearly touch the level where it began rising that could allow the weekly candlestick to close in a bullish posture. A spike in volume could be used as a strong indication that this pattern will be validated, which subsequently will validate the spinning top candlestick formation seen in the 1-week
In addition, a buy signal has been given by the TD Sequential Indicator in the form of a red nine adding credibility to the reversal patterns seen across the 1-week and 3-day chart.
Interestingly enough, a head-and-shoulders pattern seems to be forming on the 1-day chart since July 10. At the moment, XLM could be forming the right shoulder and it may drop down to around $0.082 before bouncing off to the neckline that is sitting around $0.094. A break above the neckline could be succeeded by a 22.50 percent upswing, calculated by measuring the height from the neckline to the head of the formation.
It is worth noting, that a move below $0.080 could invalidate the head-and-shoulders pattern and a further drop below the Feb. 06, 2019 low $0.073 could jeopardize all the bullish patterns seen in the larger timeframes.
After the major upswing that was seen across most cryptocurrencies in the industry, they all appear to have reached an exhaustion point for their bullish trends. That said, in some cryptocurrencies the retracement has not been as pronounced as the pull back that XLM experienced. Even so, it seems like there are different bullish patterns that could be signaling a continuation of the uptrend.
Binance Coin and EOS could have developed a hammer candlestick pattern in their weekly chart, while Stellar saw a spinning top candlestick. These are considered reversal formations, which suggest the upswing may resume if volume starts picking up. Nevertheless, given the unpredictability of the markets, it’d be wise to set a stop loss if the market invalidates these signals.
Filed Under: Altcoins, Binance, EOS, Price Analysis, Stellar, Technical Analysis, Trading
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