XTZ Technical Analysis: Trendline Retest Teases Bullish Reversal

Key technical points:

Past Performance of XTZ

The market value of XTZ fell 60% in six weeks starting from April to mid-May, resulting in the fallout of a crucial level of $2. However, the bullish support at $1.60 led to the double bottom pattern formation leading to the resistance trendline breakout. Nonetheless, the overhead resistance at $2 knocks down the bullish attempt to retest the broken trendline.

Source-tradingview

XTZ Technical Analysis 

The evening star forming near the $2 mark led to a 13% fall in XTZ prices to retest the broken trendline. The increase in trading volume displays a solid selling spree near $2, majorly due to the profit booking pressure. However, the lower price rejection in last day’s candle and the recovery in the first half today, during the Asian market hours, hints at a post-retest reversal.

The MACD and the RSI indicators suggest the possibility of a bullish reversal from the $1.80 mark. This is because of the bullish divergence and the uptrend above the 14-day SMA in the RSI and the uptrend in the MACD and signal lines.

However, the Stochastic RSI indicator displays the K and D lines falling in the neutral territory in a bearish alignment to the recent crossover event.

Therefore, the indicators question the post-retest reversal rally's sustenance and suggest traders wait for the price action confirmation to avoid traps.

Upcoming Trend

Suppose the morning star pattern is formed successfully, resulting in a post-retest reversal rally; the buyers can expect the market value to inflate by 15% to retest $2.15. However, an increase in buying pressure will drive the market value to $2.5.

On the opposite end, the bearish takeover will break the support level of $1.66 to test the bottom of $1.39.

Resistance Levels: $2.15 and $2.50

Support Levels: $1.66 and $1.39