This article is an update from the previous technical analysis of Algorand (ALGO).
Amidst the broader crypto downturn, Algorand’s ALGO token plunged to an all-time low of $0.09, echoing Bitcoin and Ethereum’s recent dump to under $25k and $1.6k, respectively.
Moreover, the negative sentiment stemming from the US SEC Chairman’s identification of ALGO as an unregistered security in lawsuits against Bittrex and Binance in the past few months has intensified the decline, contrasting with his prior endorsement of Algorand’s blockchain potential.
The daily chart for ALGO reveals a persistent downtrend, firmly entrenched within a channel down pattern. While the recent dip might raise concerns among investors, those with an appetite for discounts could see this as an accumulation opportunity.
The price momentarily dipped below the support established in June this year, hitting $0.0823. Speculation suggests the possibility of revisiting the lower boundary of the channel down pattern, which has historically been a bounce point, observed notably in December 2022.
In this extended bear market, ALGO continues to record lower lows. Breaking above significant resistance levels, such as the highs of November 2022 and March 2022, becomes pivotal for any consideration of a major bull market resurgence. Until these barriers are overcome, the prospect of a prolonged downtrend remains.
The current situation prevents a definitive call on whether the current price is the bottom. The market could continue its descent until it decides to reverse course. However, history demonstrates that trends, whether bear or bull, eventually come to an end. The challenge for investors lies in maintaining composure during these trying times and making strategic decisions.
An oversold region was briefly touched, followed by a return above the RSI block spanning from 34 to 31. Historically, entering this block signaled opportune buying moments, with instances of brief oversold conditions providing even stronger buying opportunities. Notably, this zone has frequently been a launchpad for bounces throughout 2022 and 2023. While the RSI slowly inches away from oversold territory, there remains time for investors to consider averaging in at the current prices.
The weekly chart reinforces the narrative, showcasing a formidable resistance trend line that has played a significant role in the market’s behavior. This line has repeatedly stymied ALGO’s upward momentum, witnessed during periods like November 2021, January 2022, October 2022, and more recently, February and April 2023.
Examining the weekly RSI, it becomes apparent that the current level aligns with historical buying opportunities. Instances of March, December, August, and June 2022, all showcase the merits of investing when the RSI hovers in this lower range. Conversely, an RSI above 70, such as seen in 2021, often signals a selling point.
In conclusion, Algorand (ALGO) finds itself amidst a challenging downtrend, evoking mixed sentiments among investors. While the prolonged bear market necessitates overcoming substantial resistance levels for any consideration of a bull market, historical patterns suggest that a trend reversal is inevitable. The key for investors lies in strategic accumulation during these uncertain times, preparing for a potential eventual surge in ALGO’s fortunes.
Rickie Sanchez is an article writer specializing in cryptocurrency news. Since late 2017, he has been actively investing in cryptocurrencies. He is enthusiastic about everything that has to do with crypto and he hopes that the readers of his articles in the years to come will gain a massive understanding of blockchain technology.