- Algorand price continues to form a new support zone before initiating a new breakout.
- Massive Ichimoku gaps point to an imminent mean reversion setup.
- Downside risks remain likely but are limited in scope.
Algorand price action is currently struggling to capitalize on last week’s rally. Despite last week’s candlestick closing in the red, it did print a bullish hammer reversal pattern after ALGO rallied more than 20% from the weekly lows.
Algorand price positioned for a massive 50% spike
Algorand price has developed some of the last gaps between the weekly candlesticks and the Tenkan-Sen than any other cryptocurrency. Not only are the gaps huge, but the time spent without a mean reversion is at the end of when an instrument is expected to return to the Tenkan-Sen. Generally, the gaps between the bodies of the candlesticks and the Tenkan-Sen resolve within three to six periods—ALGO is in its sixth day of consecutive gaps.
ALGO/USDT Weekly Ichimoku Kinko Hyo Chart
Another contributing factor pointing to an imminently bullish bounce is the oversold nature of ALGO’s oscillators. The Optex Bands oscillator is at an all-time low, and the Composite Index is at the second-lowest low in its history. Combining the significant Ichimoku gaps and the extreme oversold conditions in the oscillators has generated an early entry opportunity on the Algorand price Point and Figure chart.
A hypothetical long setup is now present on the $0.05/3-box reversal Point and Figure chart. The setup is a buy stop order at $0.90, a profit target at $0.75, and a profit target at $1.45. The trade represents a 3.67:1 reward for the risk. A two-box trailing stop would help protect any profit generated post entry.
ALGO/USDT $0.05/3-box Reversal Point and Figure Chart
The hypothetical long trade is invalidated if Algorand price drops to $0.70 before the entry is triggered.
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