Algorand: The guide to profitably trade along ALGO’s current price structure


Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

Algorand’s (ALGO) correlation with the king coin over the last 6-7 months drew down the alt to its yearly lows in May. In its recent descent, ALGO hovered near the Pitchfork. The tool has assumed a vital area of value over the last three months.

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An unpleasant reversal from the 20 EMA (red) or the Point of Control (POC, red) would reaffirm the strength of the ongoing devaluation phase.

The broader market structure will play a crucial role in determining the possibility of a bull run. At press time, ALGO traded at $0.41372, up by 6.57% in the last 24 hours.

ALGO Daily Chart

Source: TradingView, ALGO/USD

Except for a few instances, the price has remained below the daily 20 EMA/50 EMA (cyan) for over six months. Thus, revealing the strong bearishness of the ongoing trend from a short and long-term view.

The alt lost nearly 65% of its value (from 2 April) and pulled back towards its 15-month low on 12 May. Since then, the lower fence and the Median of the Pitchfork have offered strong resistance.

As the current structure exhibited a bearish inclination, a reversal from the 20 EMA (red) or the median of the Pitchfork could lead to a continued slump. In this case, a fall below the $0.4-zone would open up shorting opportunities with a take-profit level at the $0.35-$0.37 range. However, any close above the POC or the median of the Pitchfork could lead ALGO toward the $0.5-zone.

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Rationale

Source: TradingView, ALGO/USD

The RSI’s recent trajectory reflected a gradual growth. But its higher peaks saw a weak bearish divergence with the price action. Thus, reinforcing the bearish edge in the near term. To invalidate this, the bulls needed to find a close above the 46-mark resistance.

Also, the Aroon down has been hovering near the 0% level while reflecting a strong bearish edge. The traders/investors should watch for its bounce-back above 30% to enter short-term calls.

Conclusion

In light of multiple hurdles in the $0.42-$0.44 range, ALGO could see a setback toward the $0.35-baseline. Unless the bulls provoke massive capital inflows, the downtrend could likely continue in the coming sessions.   

An eventual close above the median of the Pitchfork could open strong trend-altering revival gates.

Finally, the investors/traders should keep an eye on Bitcoin’s movements as ALGO shares a 79% 30-day correlation with the king coin.


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