Tezos [XTZ] bulls reclaim $0.7, but should traders expect a pullback now?
The slow trend reversal for Tezos began in mid-July when the price refused to go lower than $0.47.
Key Takeaways
Tezos has a strongly bullish outlook in the short-term and long-term after reclaiming a key resistance zone at $0.7. Traders should now be wary of deep pullbacks and liquidity hunts.
Tezos [XTZ] has gained 8.2% in the past 24 hours on the price charts. Coinalyze data showed that its Open Interest was up 51.2% in the same period.
Thus, the rally had intense speculative bidding recently, but it was also a warning sign of a move driven solely by the derivatives market.
The Futures data showed an explosion in Open Interest over the past two days as the $0.68-$0.7 resistance started being tested.
Tezos bulls appeared confident of a breakout, given the bullish strength of Bitcoin [BTC] and the altcoin markets in July.
The spot CVD has not trended higher, which reinforced the short-term concerns that the rally driven by speculative traders. This might see heightened volatility and deeper pullbacks, which could affect traders.
How should investors and traders navigate the market in the coming days?
The long-term Tezos outlook has turned bullish
The 1-day chart showed a bullish structure break on the 9th of July. Marked in cyan, this bullish structure break came after XTZ set higher lows since mid-July.
Bulls have been preparing for this rally, and have been unstoppable over the past ten days. Since the bullish market structure break, XTZ has gained 40% in value.
It also managed to climb past the $0.7 resistance zone. Highlighted by the cyan box, this supply zone stretched back to March. Tezos bulls failed to break past this area upon the May retest.
Now that XTZ had breached this supply zone, a retest of the same would offer a good buying opportunity.
The RSI on the 1-day chart was at 84, in overbought territory. This was an early sign that traders should think about a pullback scenario. The OBV showed buying pressure on Tezos in recent days.
Hence, a retracement toward $0.7-$0.75 could offer a good buying opportunity.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
