Over the past week, Bitcoin (BTC)and altcoins have taken a serious hit and currently, Bitcoin is still down 7.09% since topping out at $10,485 on Feb. 13. Many altcoins that bore the brunt of the sharp correction are still nursing their wounds and the double-dip correction of the past week appears to have investors cautious about piling back into cryptocurrencies.
Crypto market daily price chart. Source: Coin360
On Feb 15 as the entire market pulled back, Tezos (XTZ) dropped 22.62% but since Feb. 17 the altcoin has recovered 25.85% to trade at $3.50.
Since the start of 2020, the altcoin is up 199.52% and for the past two weeks, analysts have cautioned that the parabolic rally could end at any moment and be followed by a strong retrace.
Above $3.95 Tezos is targeting its all-time high at $4.12 meaning the altcoin would be free to explore higher prices once knocking out the all-time high.
XTZ USD 6-hour chart. Source: TradingView
At the time of writing, XTZ has support at closeby at $3.53 and below at $3.27. If a sharper pullback occurred, in the past the altcoin bounced at the 38.2% Fibonacci retracement level ($2.91) and also near the 50% retracement near $2.59 so traders will likely have targets in this area.
On the shorter time frame (6hr) one can see that XTZ painted longer wicks, a sign of profit-taking, and the altcoin has descended into a pattern of lower highs but has yet to register a lower low.
The moving average convergence divergence (MACD) has dipped below the signal line and the histogram has dipped below 0 into negative territory. The relative strength index (RSI) also has pulled back from 70 to 55 as the price approaches the support at $3.50.
Some positive signs are the high volume node of the volume profile visible range (VPVR) at $3.50 and the fact that this level aligns with the moving average of the Bollinger Band indicator, which is where XTZ price has bounced in the recent past.
Given that XTZ rallied 43% to $3.95 since Feb. 17, a pullback followed by some consolidation seems normal. For the short-term traders will watch to see if the price holds at the $3.50 support.
While toppy, the uptrend remains intact but traders should keep an eye on trading volume and watch to see if the price drops below the 23.6% Fibonacci retracement level at $3.30 as this would be a break below the ascending trendline.
XTZ USD daily chart. Source: TradingView
If the ascending trendline is broken, the daily timeframe shows the Bollinger Band indicator moving average at $2.83, not too far removed from the previous double bottom at $2.76 where the price bounced on Feb. 16 and Feb. 17.
As mentioned earlier, there is also support at $2.64 near the 50% Fibonacci retracement level so a pullback to this area followed by consolidation is a likely scenario being considered by traders.
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