Algorand [ALGO] testing local lows: A breakdown on the way or a bear trap

Virtually 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, but it surely has since then given up these positive aspects in favor of a help retest.

ALGO’s newest worth motion has been trying to problem the earlier low, with the value dipping to $0.352 inside 24 hours at press time. It additionally appears like ALGO’s worth motion has been restricted beneath its descending resistance line. The latter was a part of its wedge sample earlier than the value broke via help in the direction of the tip of April.

ALGO’s present worth motion means that the earlier low may maintain as the brand new help stage. Its worth motion bounced again from the identical stage within the final three days.

ALGOUSD 2022 05 29 17 27 55

Supply: TradingView

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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 value drop, and it highlights elevated power close to the brand new help stage. Nonetheless, no vital directional change has been noticed, which means the bears are dropping momentum and the bulls haven’t responded.

Will ALGO’s present help stage maintain, or will it give strategy 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 aspect throughout the ongoing crypto winter, with most of them breaking via structural help ranges. Maybe its on-chain metrics might present a greater have a look at the place it is likely to be headed.

It appears like sentiments within the derivatives market are enhancing. For instance, each the Binance and FTX funding charges improved between 26 and 29 Could. Though derivatives would not have a direct influence on the spot market, they do go hand-in-hand with demand within the spot market.

Algorand ALGO 18.01.10 29 May 2022 1

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 may assist bolster the help line.

Algorand ALGO 18.15.16 29 May 2022

Supply: Santiment

Though the metrics paint a wholesome image, the market isn’t out of the woods but. There’s nonetheless some threat of extra worth slippage, therefore traders ought to proceed with warning.

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