The EOS price is still recovering from the -75% one-day drop. It may be about to face its stiffest test yet, as the price approaches a key resistance level.
The low of $4.016 on the 23rd of May, was a far cry from the lofty heights less than two weeks earlier. On the 12th, the EOS price was $14.860.
In line with many altcoins, EOS lost around 75% of its value from that high.
Since then, the price has rallied 80%, from the low to $6.340. Whilst the bounce is healthy, the market remains -$57% from the highs earlier in the month.
The bulls may be encouraged by the recent price action, but EOS first needs to clear an important level to confirm the recovery.
The 4-hour chart illustrates the rollercoaster ride EOS has been on recently. The price action in May, so far, resembles an amplified version of the previous month.
A new high, followed by a pullback, followed by a new high. After EOS made the second high, it corrected, then bounced, before a deeper correction.
After the sharp decline in April, the price finally found a low of around $4.400 before reversing. The second drop in price to $4.624 was also reversed intra-day.
The EOS price then went on to gain 220% in the following three weeks.
A similar pattern has formed this week. The price bounced from the $4.050 low on the 19th, only to trade lower a few days later. However, similar to May, the price has again found support around the previous low.
I view this as an encouraging development overall but the price is now running into an important area of resistance.
The 0.5% Fibonacci retracement from the 19th of May is $6.782. The previous relief rally on the 19th failed to clear this level. This failure resulted in the EOS price reversing to a new low.
Therefore, I would consider this a big test of the recent rally. A clearance of this area should set the price up for an extension to the $8.820 April high.
A failure to clear the resistance would suggest the rally has stalled for now and the price may retrace towards $6.000.
I maintain an overall bullish bias. However, I suggest waiting for the price action at this level to play out before making a trading decision.
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