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Traders who missed the Tezos bull run can crave here

Disclaimer: The results of the following analysis represent the sole opinion of the author and should not be construed as investment advice

As the weekend approached, most of the alts in the top 50 struggled to extend their recovery after Bitcoin fell to $ 45,000. Some anomalies like Polkadot and Kusama surprised the market with decent gains, but Tezos appeared to be leading by example.

XTZ saw another 33% increase, making a new local high at $ 6.4. The bullish sentiment was also high after the American rapper Doja Cat released an NFT collection on the Tezos platform a few days ago. However, a closer look at the hourly chart indicated that some profit-taking had begun.

Tezos hourly chart

Source: XTZ / USD, TradingView

Like most of its counterparts, XTZ fell victim to a broader market sell-off on September 7th. Since this also coincided with the collapse of XTZ’s upward channel, losses from the lower trendline were nearly 30%. Some Candlewicks even fell to $ 3.88, marking a 2-week low for the digital asset.

Interestingly, the $ 2.88 region had a huge impact on the XTZ market. The support line had triggered several rallies from February to March. The most recent jump came just a week ago after XTZ’s impulsive drop from $ 4.5 to the above support.

The result was a 40% increase towards $ 5.4. It did so again as buyers reacted immediately to the collapse of XTZ.

On the other hand, there has been some restless movement in the past few hours. High volatility was responsible for some losses as XTZ fell from $ 6.4 to $ 6 at press time. With sellers pushing forward, the $ 5.65 to $ 5.77 defensive zone would be the best bet to support XTZ’s near-term move.

The USD 4.54 support line could also step into action if downside pressures persist. Conversely, a closing price below an important support level at USD 5 could hurt the bullish structure of XTZ.

argumentation

All of the XTZ indicators gave way from extreme levels. The buying pressure on the MACD gradually subsided and a bearish crossover became apparent. The Awesome Oscillator, trading at a multi-month high, also saw a series of red bars.

Meanwhile, the RSI cooled off from overbought levels and moved towards the half-line. Such a figure would actually be healthy in the long run as it would allow XTZ to stabilize before the next upswing.

Conclusion

XTZ appeared to be looking for some support lines to contain incoming losses. This would allow its indicators to reset before the next wave of buying pressure hits the market. In the meantime, traders in the above support regions may long to take advantage of the next upswing.

However, traders need to be careful even with a closing price below $ 5 as this would invite short sellers into the market.

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