Algorand [ALGO] traders should gauge the potential of this reversal pattern

Buyers of Algorand [ALGO] finally found rebounding opportunities in the $0.28-zone. Thus, the altcoin rose from the ashes of its multi-monthly lows over the last two days.

The 38.2% and the 61.8% resistance levels have curbed the buying rallies over the last few days. So, a likely retest of the 61.8% level would position ALGO for a near-term pullback in the coming sessions. At press time, ALGO traded at $0.335505, up by 7.78% in the last 24 hours.

ALGO 4-hour Chart

Source: TradingView, ALGO/USD

After the buyers failed to break above the $0.41-resistance, ALGO saw a series of red candles after a bearish engulfing candlestick. The alt lost over 34% of its value in just ten days (9-20 June) and plunged toward its 17-month low on 19 June.

The recent up-channel (yellow) trajectory countered the selling pressure and inflicted an over 22% jump in the last two days. But the 61.8% Fibonacci resistance coincided with the upper trendline of the up-channel to create a stiff hurdle for bulls.

ALGO also registered an uptick in trading volumes alongside the recent gains while closing above its EMA ribbons. This reading depicted an edge for the buyers.

The alt would likely aim to test the 61.8% level before facing a near-term setback on the chart. Any break below the up-channel could provoke a downswing toward the $0.3-$0.31 range. Should the 20 EMA cross above the 55 EMA, the EMA ribbons could provide reliable support.

Rationale

Source: TradingView, ALGO/USD

Over the last five days, the RSI resonated with the price action while jumping above the equilibrium. A fall below the 62-60 range would further affirm the chances of a near-term slowdown on the chart.

Furthermore, with the CMF hitting a plateau at the 0.10-mark, any reversals could hamper the short-term buying efforts. Nevertheless, the ADX of ALGO revealed a substantially weak directional trend.

Conclusion

Looking at the up-channel setup approaching the 61.8% Fibonacci resistance, ALGO could see a breakdown from this structure. In this case, the $0.3-$0.31 range can offer rebounding grounds for potential buying endeavors.

However, the investors/traders should keep a close watch on Bitcoin’s movements as ALGO shares an 89% 30-day correlation with the king coin.