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Algorand could retest this supply area before another leg downward

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The crypto market and the stock markets showed weakness in recent days. Bitcoin was unable to find strong buyers at the $40k area and, after a few days of skirmishing the bears have come out on top. Algorand has slipped beneath strong levels of former support and flipped them to resistance. This looked likely to occur once more at the $0.95 area for Algorand, where short positions could be opened.

Source: ALGO/USDT on TradingView

Two weeks ago the price was hovering above the $1.36 level, which had some confluence with the longer-term support level at $1.32. A week before press time, the buyers looked to be exhausted. Since then, trading volume has steadily been rising while the price was pushed under $1.32. It tested this level twice as resistance before the selling pressure of the past two days.

The yellow Fibonacci retracement levels were based on a longer-term move from Algorand. This move was ALGO’s bull run from $0.67 to $2.49 in June-September of 2021. At the time of writing, the price has retraced most of this move. The $0.95 level was a significant level of support in the past.

This level was tested as resistance and flipped to support in August, and at the time of writing, the price has crashed right past this area. Since it has had importance in the past, it was a good area to look to open short positions at.

Rationale

Source: ALGO/USDT on TradingView

At the time of writing, the price was $0.89 and both the RSI and the Stochastic RSI were in oversold territory. The Awesome Oscillator was also heavily bearish.

The oversold momentum indicators showed that there was a chance ALGO could see some upside before the next leg down. However, the trend would likely still remain bearish.

Conclusion

There was no guarantee that the price would even be able to push up toward the $0.95 level. Selling pressure was likely to mount over the weekend, although a pump upward in search of more favorable short-positions could also commence over the weekend.

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Akashnath Sumukar works as a Senior Journalist at AMBCrypto. Based in Chennai, India, he has been an avid follower of the cryptocurrency market since Bitcoin’s boom and bust cycle of 2017. A graduate in Chemical Engineering, he is an expert in technical analysis. In fact, Akashnath has a particular interest in reading price charts and predicting how an asset will move over the short and long term. A self-taught trader and as someone who holds cryptos himself, he is always on the lookout for the next opportunity he can possibly capitalize on, while also educating his audience.
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