beincrypto.com
The Algorand (ALGO) price is approaching a crucial support level at $0.19. A bounce is likely once it gets there.
ALGO is the native cryptocurrency of the Algorand blockchain, a proof-of-stake blockchain that deals with smart contracts. The Algorand price has decreased since breaking down from and validating an ascending support line (red icon) as resistance (red icon) on Feb. 21.
The downward movement was preceded by bearish divergence in the daily RSI (green line). The indicator is now below 50, a sign of a bearish trend.
Interestingly, the price has not bounced at all since the downward movement began, and actually fell below the 0.618 Fib retracement support level on March 8. This is a bearish sign that shows a lack of strength for buyers.
The next closest support area is at $0.19. If the ALGO token price fails to bounce at it, it could fall to its yearly low near $0.16.
Algorand (ALGO) Falls Sharply After Breakdown
A closer look at the technical analysis from the six-hour chart shows that the two portions of the decrease nearly have a 1:1.61 ratio. This is common in both A-B-C correction (black) and five-wave downward movement (red). A 1:1.61 length would also coincide with the previously outlined $0.19 support area.
Therefore, the ALGO price is expected to reach it. However, the is no bullish divergence in the six-hour RSI that would indicate a reversal is near.
So, the reaction once the price gets to $0.19 will likely determine the future trend’s direction. A considerable bounce would mean that the correction is complete and new highs will follow. On the other hand, a weak bounce would mean that the trend is still bearish, and the price will fall below $0.16.
An increase above the previous low of $0.23 (red line) would mean that the correction is complete.
To conclude, the most likely ALGO price forecast is a drop to $0.19 followed by a bounce. The shape of the bounce will likely determine the future trend. A weak bounce would mean that the trend is bearish, and the price will fall to $0.16. On the other hand, an increase above $0.23 would mean that the correction is complete, and the ALGO price will increase to $0.30.
For BeInCrypto’s latest crypto market analysis, click here.