Quant (QNT) has broken out from a long-term descending resistance line and might have initiated a bullish trend reversal. However, a short-term retracement could transpire prior to the continuation of the upward movement.
QNT has been moving downwards underneath a descending resistance line since reaching an all-time high price of $429.69 in Sept. The downward movement led to a low of $40.60 in June.
The price has been increasing since, and broke out from the descending resistance line on June 19. At the time, the line had been in place for 280 days. The bounce and breakout also served to validate the $45 horizontal area as support.
Furthermore, the weekly RSI is in the process of moving above 50 (green icon), something which is considered a sign of a bullish trend.
If the upward movement continues, the next closest resistance area will be at $150.
Ongoing breakout
Cryptocurrency trader @CryptoGodJohn stated that QNT is one of the coins that could continue performing well, since it has more than doubled since the June 13 bottom.
Measuring from the low, the price has so far increased by 160%. Currently, it is trading right at the 0.618 Fib retracement resistance level, where it has created several long upper wicks (red icons). Such wicks are considered signs of selling pressure.
Additionally, the daily RSI is in overbought territory, though there is no bearish divergence yet. So, it is possible that a short-term pullback will transpire prior to continuation.
The possibility of a short-term decrease is also supported by the six-hour RSI, which has been generating bearish divergence since July 14. During this period, the price has also created a double top, which is considered a bearish pattern.
If a retracement occurs, the main support would be between $77 and $87, created by the 0.382 and 0.5 Fib retracement support levels and is also a horizontal support area.
QNT wave count analysis
The wave count suggests that the increase since the bottom is part of a five-wave upward movement. In it, the price is currently in wave three (black), which extended. The sub-wave count is given in red.
When drawing a channel connecting the highs of waves one and three and the bottom of wave two, a potential target for the bottom of wave four is at $87, aligning with the previously outlined support area.
Afterward, the upward movement would be expected to continue.
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