After plummeting below the $0.68-mark, Algorand [ALGO] hovered around the high liquidity range near $0.7 for over a week. However, the broader liquidations led the altcoin to accelerate its southbound journey to the $0.39 support.
While the current recovery aimed to slam the 23.6% Fibonacci resistance, any close below the 20 EMA (red) could transpose into undesired short-term losses. At press time, ALGO traded at $0.4767, down by 2.63% in the last 24 hours.
ALGO 4-hour Chart
After the buyers dwindled at the $0.57-resistance, ALGO saw a string of bearish engulfing candles that pulled the alt to the $0.39-floor. This level has offered a strong floor for over a year now. The alt lost nearly 56.87% of its value (from 8 May) and dived towards its 15-month low on 12 May.
Since then, the 23.6% Fibonacci resistance has revealed its stiffness by curbing the buying rallies within the bounds of the $0.49-level. To top it up, the recent revival has chalked out a bearish rising wedge on the 4-hour timeframe. The altcoin has been moving into a tighter phase in view of the current pattern alongside the declining trading volumes.
A potential move below the $0.47-zone would make way for an unsought correction toward the $0.4-$0.45 range. With the Supertrend refusing to change its bearish viewpoint and the 50 EMA posing an immediate threat, the buyers had slim chances of an unrestrained recovery beyond the $0.49-mark.
The RSI continued its sluggish phase near the midline and reiterated the near-term squeeze in the current price movements. A sustained close below the equilibrium could transpire into an unwanted pattern breakout on ALGO’s chart.
Further, the CMF dipped below the zero-mark while aiming to test the -0.1 level. A lift-off from this level could potentially bring in some hopes for a bearish invalidation.
Given the confluence of the 50 EMA with the 23.6% level, the bears had a superior edge in defending the $0.49-zone. Also, with a rising wedge setup, the bulls needed to substantially ramp up the buying volumes to disregard the selling tendencies.
Last but not least, the investors/traders should keep a close watch on Bitcoin’s movements as ALGO shares a 74% 30-day correlation with the king coin.