- Algorand’s recent price action revealed a strong bearish edge.
- Derivatives data on Binance has revived hopes for buyers in the short term.
Algorand [ALGO] has been entering an uncertain market lately. At the time of writing, the price action was struggling to stay above the 50 EMA and 200 EMA levels, showing that the bears were firmly in control.
Despite a recent rebound from the $0.1 support level, ALGO failed to regain key resistance zones.
Like the Crypto Fear & Greed Index Having entered the ‘Fear’ zone, the altcoin’s near-term recovery prospects appear doubtful. At the time of writing, ALGO was trading at $0.12, showing signs of some near-term consolidation.
ALGO bears prevent a break above trendline resistance
Source: TradingView, ALGO/USDT
ALGO’s price recently formed a descending triangular structure on the daily chart, with lower highs indicating continued selling pressure. Over the past month, the $0.1 support zone has been critical to ALGO’s defense.
If this support breaks, we could see a sharp decline towards $0.0885, the next major support level.
On the upside, the 50 EMA ($0.12) could be a significant barrier, coinciding with the long-term declining trendline. A break above this convergence of resistance could trigger a bullish reversal towards the $0.13 and $0.15 levels.
However, bulls need huge volumes to make this possible.
The MACD indicator showed fairly flat momentum, with the signal line slightly above the MACD line. This indicates a slight edge for the bears in the short term.
If the MACD enters the positive territory, it could indicate the beginning of a bullish phase. Buyers should wait for a close above the zero line to confirm this bullish upswing.
The Awesome Oscillator (AO) is hovering around the zero line, reflecting weak momentum and a lack of strong directional bias. A decisive move up or down from equilibrium could indicate early the likely price trend.
Here’s what the derivatives data revealed
Source: Coinglass
The derivatives data also reaffirmed cautious sentiment around ALGO. Open interest fell 2.59% to $23.93 million, indicating traders are reducing their exposure in anticipation of further downside.
However, the long/short ratio on Binance was skewed in favor of long positions, with a ratio of over 2.4 for top traders per account.
Volume fell 3.37%, with a total of $25.44 million traded. This further underlines that traders are waiting for a clear directional move before taking new positions.
Traders should remain cautious and look for a breakout of key levels before placing directional bets. Furthermore, ALGO’s price is closely correlated with Bitcoin’s movements and any sudden market-wide shifts could have a major impact on its trajectory.
