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Algorand [$ALGO] presented an attractive buying opportunity. As a collective, the altcoin market has not been friendly to the bulls. The altcoin market cap, including Ethereum [ETH], was up 16.7% from the crash on the 6th of February.
Meanwhile, Bitcoin [$BTC] was up 28.88% from those lows. This meant the Bitcoin Dominance was rising, signaling altcoin weakness.
Why is Algorand going strong now?
The altcoin rallied 6.8% in 24 hours on the back of the news that $ALGO is tradable on Robinhood Crypto in the U.S. This enthusiasm is part of a bullish structure, set in place after a range breakout in April.
Back then, a Google whitepaper cited Algorand as a “perfect example of post-quantum computing.” The news came at a time when quantum-vulnerability fears around $BTC were rising.
$ALGO rallied 59.95% in six days, from a swing low of $0.079 to post a high of $0.127. In the following weeks, the altcoin retraced and retested the former range high at $0.10 as support, before rebounding higher in May.
The 1-day chart above highlights the latest structure break and the subsequent retracement to the 78.6% retracement level at $0.1085.
Is the buying opportunity as clear as it seems?
While the 1-day chart showed a clear bullish trend, the 1-week chart showed the token was still operating within a long-term downtrend. This was a confusing signal, but as always, the higher timeframe holds priority.
This alters the previously bullish view of $ALGO. A move beyond $0.1456 is needed to establish a higher timeframe uptrend. Until then, the bullish 1-day structure of $ALGO can be seen as part of a relief rally.
Traders’ call to action – Use this bounce to take profits
The $0.105 level is critical in the short term. So long as the altcoin stays above this level, traders can treat May’s price action as a range formation.
This also meant that they should use a retest of $0.121 and $0.133 to take profits, as these are the local resistance zones. As the weekly chart revealed, a breakout past $0.1456 is needed to flip the higher timeframe structure bullish.
A retracement afterward could present investors with a buying opportunity.
Final Summary
- Algorand raced higher by nearly 7% for the day following news that $ALGO trading was live on Robinhood.
- The price charts gave conflicting signals, but assigning priority to the higher timeframes can help resolve the buyers’ dilemma.