Source: Crypto Briefing
Technicals Show Tezos Prices Ready for an Impressive Upswing
Tezos appears to be on the cusp of a major price movement. Technical indicators predict that a spike in demand could push XTZ prices close to its all-time high of $4.44.
Tezos Prepares for Major Upswing
Tezos experienced a steep correction after making a new all-time high on Aug. 13. The smart contract token went from trading at a record high of nearly $4.5 to recently hit a low of $1.9, a 57.4% downswing. Despite the massive losses incurred over the past two months, different technical indexes suggest that this cryptocurrency is poised to rebound.
When looking at XTZ’s 1-day chart, it seems like prices are contained within an ascending parallel channel that developed since October 2019. Prices have bounced off of the upper and lower boundaries of this channel, consistent with the expected behavior of this technical pattern.
Now that Tezos has reached the bottom of the channel history might be about to repeat itself. A spike in buying pressure around the current price levels could allow XTZ to regain ground and march towards $4 or higher. Such a move is dependent on the strength of the $2 support level.
The parabolic stop and reverse, or “SAR,” adds credence to the optimistic outlook. This trend-following indicator forecasts that Tezos’ downtrend has reached exhaustion based on the daily chart. Each time the stop and reversal points move below an asset’s price, it is considered a positive sign. Therefore, the recent flip over indicates that this altcoin’s trend changed from bearish to bullish.
Historically, the stop and reversal system has been effective in determining the trajectory of this altcoin. The last two times the parabolic SAR flipped from bearish to bullish around the lower boundary of the ascending parallel channel, XTZ’s price skyrocketed 150% and 110%.
On its way up, Tezos would likely find stiff resistance between $2.55 and $2.70. This is where the 50-day and 200-day moving averages sit. If the bulls manage to bust through this area of resistance, then the next critical level to watch is the channel’s middle line, which is currently hovering around $4.
It is worth mentioning that the bullish outlook will remain intact as long as the parallel channel’s lower boundary continues to hold. Failing to do so will not only put in jeopardy the optimistic scenario but lead to a catastrophic correction. Indeed, breaking through the $2 support may see Tezos plunge to $1.40.