Algorand [ALGO] has been maneuvering through an unpredictable market environment recently. Presently, its price performance has faced challenges to maintain levels above the 50 EMA and 200 EMA thresholds, indicating a dominant bearish trend.
Despite a recent bounce back from the $0.1 support level, ALGO struggled to recapture important resistance areas.
With the Crypto Fear & Greed Index entering the ‘Fear’ territory, the near-future recovery potential for the altcoin appears uncertain. Currently, ALGO is exchanging hands at $0.12, suggesting some signs of short-term consolidation.
ALGO bears obstruct an upsurge beyond the trendline resistance
Recently, ALGO’s price outline displayed a pattern resembling a descending triangle on its daily chart, with lower highs indicating a consistent trend of selling pressure. Over the previous month, the $0.1 support region has played a crucial role in supporting ALGO’s price.
A breach of this support could potentially lead to a rapid drop towards $0.0885, which serves as the subsequent major support level.
On the positive side, the 50 EMA ($0.12) could act as a substantial obstacle, aligning with the extended descending trendline. A breakthrough above this cluster of resistance may instigate a bullish reversal towards the $0.13 and $0.15 levels.
Nonetheless, significant trading volumes will be essential for bullish momentum.
The MACD indicator demonstrated relatively stagnant momentum, with the signal line slightly surpassing the MACD line, providing a slight advantage to the bears in the short run.
If the MACD crosses into positive territory, it might indicate the onset of a bullish phase. Traders are advised to wait for a closure above the zero mark to confirm this bullish resurgence.
The Awesome Oscillator (AO) has hovered near the zero line, indicating weak momentum and a lack of a clear directional bias. A definitive move upwards or downwards from the equilibrium could offer insight into the probable price trend early on.
Insights from the derivatives data
The derivatives information further confirmed a wary sentiment surrounding ALGO. Open interest dwindled by 2.59% to $23.93M, indicating that traders are scaling down their exposure in anticipation of potential downside movements.
However, the long/short ratio on Binance favored long positions, with top traders by accounts showing a ratio exceeding 2.4.
Trading volume decreased by 3.37%, totaling $25.44M traded, underscoring traders’ preference to await clear market directions before engaging in fresh positions.
Traders are advised to exercise caution and monitor crucial breakouts before committing to directional trades. Additionally, ALGO’s price movement closely aligns with Bitcoin’s trajectory, and any abrupt market-wide shifts could significantly influence its course.