After sitting in a descending-triangle range since February, Tezos (XTZ) faked out traders around the globe with a week-long breakout before slamming back below the diagonal resistance line before quickly catapulting itself to the bottom of the range. But which way is next for XTZ and what should traders be looking for from a technical-analysis standpoint?
The Bull Case
The past few days notwithstanding, with Bitcoin in a clear bull-market and dozens of alt-currencies having made they types of gains not seen since the winter of 2017, one has to weigh prices through at least a slightly bullish lens until the market dictates otherwise.
With that in mind, XTZ price is currently sitting inside a support/resistance zone that’s been respected from both sides multiple times since last December. This past week it has “run the stops” on a high-liquidity area from the past three price-surges and has managed to avoid collapsing below the zone in the process, at least so far. If Tezos bulls can indeed hold the line and prevent bears from reclaiming the 0.00022 area, I’d expect to see a significantly powerful move to the upside in the coming days or weeks.
The Bear Case
Alternatively, if Tezos bears can win this key battle, XTZ price should see a decline of an additional 20-30% to test the next area of support between 0.00019 and 0.00017. Of course, there’s always a possibility of market-makers exacting max damage on both side by running a long, quick wick below the current support zone, forcing longs to close and trapping a new set of shorts before taking the market upwards on the backs of liquidated retail traders. Therefore, risk-averse traders should avoid trying to “catch a falling knife” and allow price-action to pain a definitive picture before entering any trades.
Yaniv Son is a cryptocurrency trader and former professional poker player turned poker coach and author at spinandgostrategy.com