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EOS and Cardano Formed a Golden Cross, Signals Further Advance

EOS and ADA entered a bull market based on this technical pattern.

Link price analysis July 30

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EOS and Cardano have had a similar price action thus far this year. Both of these cryptocurrencies saw the formation of a major bullish pattern around the same time while they were surging. Now, they could be preparing for a retracement before continuing their bullish trends. 

A Significant Bullish Signal Developed

Over $110 billion have flooded the cryptocurrency market since the beginning of 2020. The substantial inflow of capital allowed many digital assets to surge, including EOS and Cardano. 

In fact, the price of these cryptocurrencies appreciated 106.50% and 95%, respectively.

As EOS and ADA began climbing, a golden cross formed within their respective 1-day charts. This technical pattern developed when the 50-day moving average crossed above the 200-day moving average. 

Some of the most prominent technical analysts in the industry see this pattern as one of the most definitive buy signals that could start a bull market.

The last time these cryptocurrencies experienced a golden cross between their 50 and 200-day MA was in early April 2019. 

Following the moving average crossover, EOS skyrocketed 105.50% while Cardano surged over 50%. Now, a similar scenario could take place, but first, these cryptos could retrace after the latest exponential price increase. 

EOS/USD and ADA/USD by TradingView

EOS Could Be Preparing for a Pullback

The TD sequential indicator estimates that a retracement could soon be underway based on EOS’ 1-day chart. Over the last few days, this technical index presented two sell signals: one in the form of a combo 13 and the second as a sequential 13. 

Now, another bearish signal could be given soon in the form of a green nine candlestick. 

These bearish formations forecast a one to four candlesticks correction or the beginning of a new downward countdown before the continuation of the bullish trend. 

EOS/USD by TradingView

Additionally, EOS appears to be getting rejected by the upper boundary of an ascending parallel channel where it has been contained since mid-December 2019. 

Since then, each time this crypto plunged to the bottom of the channel, it went up to hit the top, and from this point, it dropped again. These are the primary characteristics of a channel.

If this technical pattern continues to hold, a retrace to the middle or the lower boundary of the channel could be expected, which may eventually prevent this cryptocurrency from a steeper correction.

EOS/USD by TradingView

Such a bearish impulse would imply that EOS would have to break below the 78.6% Fibonacci retracement level at $4.42 to then hit the 61.8% Fibonacci retracement level at $3.97. This is where the middle line of the parallel channel sits. 

A further increase in the selling pressure behind this cryptocurrency around the $4 support level could take it to the 50% Fibonacci retracement level at $3.60, which represents the lower boundary of the channel. 

EOS/USD by TradingView

Nevertheless, an increase in demand for EOS around the current price levels that lets it move above the recent high of $5 could invalidate all the bearish signs previously mentioned. 

Closing above this massive resistance cluster could potentially even take this cryptocurrency above $7. 

On its way up, EOS would have to first break through the 127.2% and 141.4% Fibonacci retracement levels. These hurdles sit at $5.81 and $6.22, respectively.  

Cardano’s Momentum Oscillators Look Bearish

Like EOS, Cardano is also presenting multiple bearish signs. First, a bearish divergence between the price of ADA and the Relative Strength Index (RSI) is forming within its 1-day chart. 

Divergences usually occur when the price of an asset is making a series of higher highs while the RSI is making lower highs. This technical pattern does not provide a precise selling point but points out that the uptrend is reaching exhaustion. 

ADA/USD by TradingView

Moreover, the moving average convergence divergence, or MACD, also appears to be turning bearish within the same time frame. This technical indicator follows the path of a trend and calculates its momentum. 

As the 12-day exponential moving average approaches the 26-day exponential moving average, the odds for a bearish crossover increase, adding credence to the pessimistic outlook.

ADA/USD by TradingView

A spike in sell orders around the current price levels could take Cardano to test the 78.6% Fibonacci retracement level for support. Breaking below this barrier could increase the probabilities for a further drop. 

The next levels of support are presented by the 61.8% and 50%  Fibonacci retracement levels sitting at $0.050 and $0.047, respectively.

ADA/USD by TradingView

Due to the considerable inflow of capital that the cryptocurrency market has seen since the beginning of the year, the bullish outlook cannot be omitted. Thus, a sudden upswing that takes Cardano above the recent yearly high of $0.063 would likely be followed by a spike in demand for this cryptocurrency. 

Such a bullish impulse could take ADA up to $0.072 or $0.073. 

Moving Forward

From a long-term perspective, EOS and Cardano look extremely bullish. 

Not only has a golden cross formed on their respective daily charts, but on their monthly charts, the TD sequential indicator estimates another seven months of upside momentum. Therefore, a validation of the bearish outlook previously presented could be seen as a positive sign. 

Retracing from the current price levels after the massive price increase seen since the beginning of the year would help maintain their healthy uptrends. Such a downturn would also provide an opportunity for sidelined investors to get back into the market.

An inflow of fresh capital would be ideal to support the macro bullish trend that both EOS and Cardano present. 

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