Algorand [ALGO] managed to perform impressively during the previous market cycle, experiencing a significant revival last month followed by a strong uptrend. This surge resulted in a remarkable 480% increase in value within a month, although the momentum started to wane in early December.
Moreover, the volume indicators for this altcoin hinted at potential challenges on the price horizon.
ALGO’s Bullish Momentum Wanes
Having reached a local peak at $0.613, ALGO had to retreat. The pullback commenced during the initial days of December when Bitcoin [BTC] was still trading within a narrow range. While Bitcoin has since broken above this range and surpassed $100k, ALGO’s value has been on a decline once again.
The market structure of Algorand turned bearish on the 1-day chart on December 9th. Subsequently, the Chaikin Money Flow (CMF) indicator has been trending downwards, indicating decreasing capital inflows. With a current reading of +0.01, neutrality prevails and fails to support a bullish market sentiment.
Furthermore, the Accumulation/Distribution (A/D) indicator displayed a downward trend. Both volume indicators highlighted a rapid decline in bullish strength over the past ten days. The Awesome Oscillator corroborated the loss of momentum.
Going forward, the Fibonacci retracement levels serve as critical support markers. Although the $0.36 level has been tested as support, it’s likely that ALGO will retest it. The subsequent targets could be the $0.3 and $0.2145 levels over the next month or two, provided there is a resurgence in demand for Algorand.
Anticipating a Shift in Sentiment…
Analysis from Santiment revealed a decrease in weighted sentiment, previously positive just a fortnight ago. Concurrently, development activity has tapered off and stagnated on the charts.
Surprisingly, there has been a total absence of development activity and contributors since December 10th. While this may be attributed to the holiday season, the anomaly is unusual compared to recent years.
Furthermore, the Open Interest has been gradually declining, as has the spot Cumulative Volume Delta (CVD). Although the latter has remained steady in the past 24 hours, it is premature to ascertain if the selling pressure has subsided.
Overall, the current outlook suggests the possibility of further price declines.
Disclaimer: The views expressed do not constitute financial, investment, trading, or any other form of advice and are solely the writer’s perspective.