Technicals Show Tezos Ready to Break All-Time Highs
- Tezos’ downtrend appears to have reached exhaustion following a nearly 50% correction.
- If history repeats itself, XTZ’s price could double in the next few months.
- Turning the $2.8 resistance level into support will add credence to the bullish outlook.
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Despite last month’s market-wide downturn, technicals show an excellent opportunity to buy Tezos. A few bullish patterns shows that XTZ has the potential to hit new all-time highs.
Tezos Poised to Resume Uptrend
Tezos experienced a steep correction after rising to a new all-time high of $4.5 in mid-August. XTZ’s price was cut in half over the past month, reaching a low of $2.3. Despite the significant losses incurred, a particular technical index suggests this cryptocurrency’s trend is about to reverse from bearish to bullish.
Indeed, the TD sequential indicator presented a buy signal on XTZ’s 3-day chart. The bullish formation developed as a red nine candlestick indicating a one to four 3-day candlesticks upswing or the beginning of a new upward countdown. A green two candlestick trading above the current green one would serve as confirmation of the optimistic outlook.
Based on historical data, the TD index has been accurate at predicting Tezos’ local bottoms. Every buy signal this technical index has presented since the beginning of the year has been validated, leading to substantials gains. Therefore, the current forecast must be taken seriously regardless of the level of uncertainty in the market.
Critical Support and Resistance Levels to Watch
XTZ’s 12-hour chart adds credence to the thesis that a significant price movement is underway. Within this time frame, the Bollinger bands have been forced to squeeze. Many technical analysts view squeezes as consolidation periods that are usually succeeded by high levels of volatility. The longer the squeeze, the more violent the breakout that follows.
The Bollinger bands’ inability to provide a clear path for the direction of Tezos’ trend makes the area between the lower and upper band a reasonable no-trade zone. But when looking at the Fibonacci retracement zone, a critical area of interest extends to the 78.6% Fib level and the recent swing low of $2.3. Breaking through the overhead resistance would likely validate the bullish scenario presented by the TD sequential indicator.
Under such circumstances, the next critical areas of resistance to watch out for are the 50% and 38.2% Fib levels. These hurdles sit at $3.4 and $3.7, respectively. But if demand is strong enough, prices could more than double, as it did before.
On the flip side, a downswing that pushes XTZ below the recent low of $2.3 may jeopardize the optimistic view. It might even trigger panic selling among investors as this cryptocurrency would be making a lower low for the first time in two years. If this were to happen, Tezos could drop to a sobering low of $1.7.
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