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The Algorand (ALGO) price trades inside a crucial horizontal support level. The reaction to it could determine the future trend.
While the daily timeframe readings and price action are inconclusive, the short-term wave count suggests that a bottom has been reached, and a significant bounce will follow soon.
Algorand Price Trades Inside Crucial Support
The daily time frame technical analysis does not provide enough evidence to determine the future direction of the ALGO price trend for several reasons.
Currently, the ALGO price is trading slightly above the significant support level of $0.11, corresponding to the 0.618 Fibonacci retracement level. According to the theory of Fibonacci retracement, there is usually a partial retracement or return to a previous price level after a significant price movement in one direction.
The 0.618 Fib level holds particular importance as it helps determine whether the price decline is merely a corrective phase.
A close below this level often indicates a bearish trend, while a bounce from it suggests that the correction has concluded. As for ALGO, either scenario may probably occur: a breakdown below this support area could lead to a decline to $0.09, whereas a bounce could test the previous highs from June at $0.14.
The daily RSI does not offer much insight into predicting the future trend either. Although the RSI is currently below 50, it has formed a higher low. Consequently, it does not confirm whether the price will bounce back or continue to decline.
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ALGO Price Prediction: Bounce or Break Down?
The technical analysis from the short-term six-hour timeframe is more bullish than the daily one. The main reason for this is the wave count. To determine the direction of a trend, technical analysts use the Elliott Wave theory, which involves studying recurring long-term price patterns and investor psychology.
The wave count suggests that the decrease since the June 24 high is a corrective A-B-C structure. If this is the case, the ALGO price trend is bullish due to the correction being downward facing. The fact that the price bounced at the 0.618 Fib level further supports this possibility.
If the count is correct, the price began a new upward movement on July 13, which will take it at least to the $0.15 resistance area.
The reaction to the $0.11 area will likely determine the future ALGO price prediction. A breakdown below it can lead to a quick fall to $0.09, while a bounce will likely cause an increase to $0.15.