Algorand [ALGO] testing local lows: A breakdown on the way or a bear trap
Nearly three weeks have handed since ALGO set a brand new 2022 low at $0.34 on 12 Could, courtesy of the crash after UST’s collapse. ALGO skilled a notable bounce-back since then, however it has since then given up these positive aspects in favor of a assist retest.
ALGO’s newest value motion has been making an attempt to problem the earlier low, with the worth dipping to $0.352 inside 24 hours at press time. It additionally seems like ALGO’s value motion has been restricted beneath its descending resistance line. The latter was a part of its wedge sample earlier than the worth broke by way of assist in direction of the tip of April.
ALGO’s present value motion means that the earlier low would possibly maintain as the brand new assist degree. Its value motion bounced again from the identical degree within the final three days.
Supply: TradingView
ALGO appears to be displaying indicators of wholesome accumulation close to its latest lows, particularly with the MFI dipping beneath 20. Its RSI didn’t enter into the oversold zone regardless of the worth drop, and it highlights elevated energy close to the brand new assist degree. Nonetheless, no vital directional change has been noticed, which means the bears are shedding momentum and the bulls haven’t responded.
Supply: TradingView
Will ALGO’s present assist degree maintain, or will it give method to extra draw back?
That is most likely one of many questions that many ALGO holders are asking themselves. Cryptocurrencies have been searching for extra facet throughout the ongoing crypto winter, with most of them breaking by way of structural assist ranges. Maybe its on-chain metrics might present a greater have a look at the place it may be headed.
It seems like sentiments within the derivatives market are bettering. For instance, each the Binance and FTX funding charges improved between 26 and 29 Could. Though derivatives wouldn’t have a direct influence on the spot market, they do go hand-in-hand with demand within the spot market.
Supply: Santiment
ALGO’s provide held by whales appears to have bottomed out at 46.35% on 22 Could. It has additionally recorded an uptick since then and had elevated to 47.30% at press time. The metric means that whales are accumulating and this would possibly assist bolster the assist line.
Supply: Santiment
Though the metrics paint a wholesome image, the market isn’t out of the woods but. There’s nonetheless some danger of extra value slippage, therefore traders ought to proceed with warning.
