BeInCrypto - The Altcoin Market Cap has fallen below a long-term horizontal level, putting the validity of the previous breakout at risk.
Due to the decrease, the previous long-term breakout is now at risk. A sharp sell-off could ensue if the altcoin market cap does not begin a reversal soon.
Altcoin Season Hopes Take Massive Hit
During the week of April 10-17, the Altcoin Market Cap experienced a sharp increase. This breakout confirmed that the price had broken out from a long-term descending resistance line that had been in place since the all-time high.
Moreover, it caused a movement above the $605 billion horizontal resistance area. This suggested that bulls have taken control and a new bullish trend had begun.
However, the entire breakout was a deviation (red circle). TOTAL2 fell below the $605 area next week and validated it as resistance.
This is considered a bearish development since the upward movement could not be sustained. It puts the potential upcoming alt season at risk.
TOTALCAP Weekly Chart. Source: Trading View
However, the weekly Relative Strength Index (RSI) shows a bullish reading with an upward trend and a reading above 50, indicating that the bull market is still ongoing.
Traders use the RSI to make informed decisions about buying or selling assets based on its assessment of the crypto’s price momentum. If the increase continues, the next resistance is expected at $916 billion.
The next resistance is at $920 billion, while the closest resistance area is at $550 billion, created by the previous descending resistance line.
Altcoin Market Cap Price Prediction: Will Price Break Down
The technical analysis from the daily time frame gives a similar reading to the weekly one. The price movement has been contained inside an ascending parallel channel since the beginning of the year.
This is a type of corrective pattern in which the price bounces between two parallel resistance and support lines until it eventually breaks down.
The pattern has confluence with the weekly readings since the rejection from the $605 billion area also coincides with the channel’s midline. The fact that the price trades in the lower portion of the channel reinforces the bearish readings.
Finally, the daily Relative Strength Index (RSI) is below 50 and decreasing. The RSI is a momentum indicator used by traders to evaluate whether a market is overbought or oversold and to determine whether to accumulate or sell an asset.
Readings above 50 and an upward trend suggest that bulls still have an advantage, while readings below 50 indicate the opposite. The current RSI reading is below 50 and decreasing, a sign of a bearish trend.
As a result, a drop to the channel’s support line at $560 billion is the most likely scenario. This will also validate the long-term resistance line.
TOTALCAP Daily Chart. Source: Trading View
Despite these bearish readings, moving above the $605 billion resistance can trigger a sharp pump to the channel’s resistance line at $730 billion.
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