ALGO's downtrend reached a maximum of 34%, but hit the key $0.40 demand zone.
In the context of weak demand, will the trend reverse at the support level?
The price of Algorand [ALGO] fell from $0.61 to $0.40, a pullback of 34%. Previously, Bitcoin [BTC]'s dominance slightly increased, causing most of the momentum in the altcoin market to stagnate at least temporarily.
In the liquidation chain reaction at the beginning of December, ALGO stabilized above $0.40, which had a significant impact on the altcoin sector. Will this level reverse the current downtrend?
Can ALGO hold at $0.40?
$0.40 area has also doubled, as price imbalances formed at the end of November and have been a key demand area. However, the last strong rebound from this area (cyan) was rejected at the upper channel high.
As of the time of writing, the price movement has returned to this area, and due to weak demand, the price may remain at this level, with an RSI reading below average being clear evidence.
Additionally, capital inflows have improved, but remain below key levels, helping to reverse the downtrend. In fact, the CMF (Chaikin Money Flow) shows that inflows in December are still below zero.
Overall, if these key technical indicators remain sluggish, a rebound at $0.40 may again face price rejection at the upper channel ($0.43).
If selling pressure continues to expand and ALGO breaks below the support level of $0.40, the next relief point may be the March high of $0.33.
Will shorting yield profits?
On the 4-hour chart, SuperTrend has not reset the sell signal marked on December 9. This means that, as ALGO's downtrend continues, shorting ALGO makes more sense than going long.
Spot market demand remains steady, combined with low CVD spot prices, supporting the bears' advantage in the market.
In summary, ALGO has weakened over the past two weeks due to a large influx of sellers into the market.
For bulls looking to re-enter the market, a strong rebound to $0.40 or $0.33 may indicate a price trend reversal. However, the rebound should be accompanied by strong demand, capital flow, and a decisive move above $0.43.
