ALGO Bounces at the $0.5 Support Level – Continuation Next?

Long-Term Levels

The ALGO price has been increasing at an accelerated rate since the beginning of August. On August 12, the price broke out above the $0.5 area, which had been providing resistance since March, and reached a high of $0.749. The ensuing fall caused the price to validate the breakout level as support. While there is some bearish divergence on the RSI, it is not very pronounced and is not present at all in the MACD. Furthermore, the largest volume has been on the most recent bullish candlestick, a sign that the upward momentum is still intact. If the price continues moving upwards, the next resistance area would be found at $0.88, created by the August 2019 highs.

Wave Count

Cryptocurrency trader @Scottmelker outlined an ALGO chart, which shows the price attempting to break out from a descending wedge, stating that the price should eventually break out.

The price has been moving upwards since and is currently in the process of breaking out. Volume is decent, but it has to pick up in order for the breakout to become legitimate. The movement is likely a part of an extended fifth wave (blue), which could end near $0.85. Besides being an important long-term resistance level, the target is found by projecting the 2.61 Fib level of waves 1 – 3. In the shorter-term, the fact that sub-wave 4 (orange) did not breach the top of wave 1 means the formation is valid. Projecting the 1.61 Fib of sub-wave 1 (orange) to the bottom of sub-wave 4 gives a similar target of $0.86.

The longer-term chart is given below. It shows that the extended fifth wave (blue) is a part of a longer-term third wave (black).

ALGO/BTC

The ALGO/BTC pair is currently at a very important level, found at 5100 satoshis. The level acted as resistance since the breakdown in September 2019. On August 13, the price purportedly broke out and reached a high of 6471 satoshis the next day. However, the higher prices could not be sustained and the price fell back below the resistance area. If the area is not reclaimed, the previous breakout may only be a deviation, followed by a strong move in the other direction. However, technical indicators now confirm the reversal. While the RSI is inside overbought territory, it has not formed any type of bearish divergence yet. However, the MACD is declining and has almost turned negative. Whether the price reclaims or gets rejected by the 5100 satoshi area will likely determine the direction of the future trend. At the current time, a rejection seems slightly more likely.