Disclaimer: The findings of the following analysis are the authors’ sole opinions and should not be considered investment advice.

As buyers pressured the $0.41 resistance, bears reacted quickly with a steep decline towards Algorand’s [ALGO] multi-month lows. The market-wide pulls accelerated the alt’s southerly journey towards the USD 0.29 support.

While the recent recovery collided with the 61.8% Fibonacci resistance, the resulting rebound may slow ALGO’s near-term recovery prospects. At the time of writing, ALGO was trading at $0.31788, up 13.04% in the last 24 hours.

ALGO 4 Hour Chart

Source: TradingView, ALGO/USD

After buyers lost their lead near the $0.41 resistance, ALGO saw a series of red candles following a bearish candlestick engulfed. The alt lost more than a third of its value in just six days (June 9-15) and hit its 16-month low on June 15.

The recent bullish engulfed candlestick nullified selling pressure by triggering double-digit 24-hour gains. But the 61.8% Fibonacci resistance coincided with the 55 EMA and created a stiff barrier for the buyers.

ALGO also registered a more than 65% increase in trading volumes in addition to recent gains. This reading showed a robust buying move, but the broader trend was still in favor of the sellers.

The traders/investors should watch out for a close below the 20 EMA and the USD 0.3101 support. A drop below this level could lead ALGO to its Point of Control (POC, red) in the $0.29 zone. Any kickback from the ribbons could cause an extended squeeze phase.

rode

Source: TradingView, ALGO/USD

Over the past five days, the RSI has marked higher highs as it jumped above equilibrium. But the resulting bearish divergence with price pulled the index below the midline. A drop below the 47-45 range would confirm the possibility of a short-term slowdown on the chart.

Aroon Up’s (yellow) recent trajectory showed a purchase intention. Closing below 70% could hamper recovery chances.

Conclusion

The confluence of the 61.8% level, 55 EMA, and the bearish divergence of the RSI could cause a prolonged decline. Any close below the USD 0.31 zone could expose the alt to a 6-7% downtrend towards the POC before a trend reversal move occurs.

A return of the 20 EMA could help buyers retest the 61.8% level in the coming sessions.

Finally, the investors/traders should keep a close eye on Bitcoin’s movements as ALGO shares a 72% correlation with the king coin for 30 days.



This post Algorand: Here’s How This Divergence Could Play Out for ALGO Traders

was published first on https://ambcrypto.com/algorand-heres-how-this-divergence-could-play-out-for-algo-traders/

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