Algorand Tests Critical Support as Self-Custody Innovations Meet Market Headwinds
Market Structure Shifts Lower
- ALGO price is down 20.6% during the week despite Algorand establishing the level of self-security for the world’s first passkey.
- Buyers are safe with support at $0.1457 tested for six straight days.
- Sellers cannot be discounted.
ALGO price is down 20.6% during the week despite Algorand establishing the level of self-security for the world’s first passkey. Although exhausting buyers are safe with six straight daily tests of support at $0.1457, sellers cannot be discounted.
The recent movements on ALGO’s chart may be the embodiment of the phrase “buy the rumor, sell the news.” Ahead of the highly anticipated release of the first-ever self-custody exchange wallet, the price exploded, shooting up nearly $0.01 in less than a day. While bulls were able to push prices even higher last week, it looks to have been a fool’s rally, with increasing sell volume confirming that bears are in control of the near-term direction. This is surprising given that buyers had clearly moved in prior to the massively successful launch of the exchange passkey login.
| Metric | Value |
|---|---|
| Asset | ALGORAND (ALGO) |
| Current Price | $0.15 |
| Weekly Performance | 1.21% |
| Monthly Performance | -20.64% |
| RSI (Relative Strength Index) | 39.9 |
| ADX (Average Directional Index) | 29.8 |
| MACD (MACD Level) | -0.01 |
| CCI (Commodity Channel Index, 20-period) | -59.43 |
RSI Drops to 39.86 – First Oversold Signal Since October’s Capitulation
With the moving average drifting up ahead of the protocol’s option product release schedule, the sharp pullback suggests an overshoot. However, the market tends to overreact at local tops and bottoms, so even with meaningful and impressive headway, ALGO is bound to face greater resistance under current circumstances.
What is interesting to note is how RSI reacted during similar readings in October – that 35-40 zone came right before a 15% relief bounce within 72 hours. Therefore, for swing traders, this balanced-to-oversold RSI at 39.86 makes for a high-probability mean reversion setup, particularly with the ISO 20022 transition serving as a fundamental floor that did not exist during prior washouts.
ADX at 29.75 Confirms Sellers Control the Trend
The trend strength readings really tell the story as ADX pushed up to 29.75, showing real directional momentum to the downside this week. In that zone above 25, it simply lets us know that the downtrend is for real, and this isn’t just choppy consolidation, but rather actual sustained selling pressure that simply overtook any buying interest from the self-custody innovations.
Based on history, ADX readings around 30 during downtrends tend to play out over 5-7 trading days before mean reversion takes over so day traders should be ready for more volatility but look for ADX to peak and roll over as a sign that selling pressure is easing-up especially if ALGO can maintain its ground above that frequently retested $0.1457 floor.
20-Day EMA at $0.1535 Becomes First Resistance Target
Looking ahead, ALGO/USD must avoid backtesting the most recent swing low at $0.1359 to prevent fresh entries being triggered, with underlying support currently quite thin if they choose to escalate the sell-off. At that point, December’s low session low converged with the 61.8% Fibonacci retracement at $0.1293 to form a “golden pocket” retrace of the previous month’s rally.
Importantly, the previous support zone at $0.1535 becomes the new resistance that bulls have to overcome to alter short-term posture. A 5.3% range is locked as a result of the current price ($0.1457) and the 20-day EMA; this range could expand substantially in either direction, depending on how the winds of market conditions blow and the likely catalyst that would activate such a phase, if a resolution is forced by external factors.
Support at $0.1457 Tested Six Times – Bulls Make Their Stand
The nearest support zone is in the vicinity of $0.1457, a point that prices revisited during the first hours of Sunday trading. There, they encountered buying interest that helped lift the market by more than 15%.
There is strong resistance between $0.1535 (20-day EMA) and the key $0.20 level, which acted as a stiff barrier for December. The monthly high is located at $0.1919, which is nearly 19% away and would require the price to surge by 31% just to test it. However, oversold turns ridiculous when fueled by positive news.
The market structure is an interesting dichotomy where technicals scream bear with price below all major EMAs, but the repeated defense of $0.1457 combined with oversold momentum readings hints that accumulation may be taking place. With the ISO 20022 compliance ALGO puts itself in a unique position among layer-1 protocols for institutional payment rails, a fundamental disconnect with current price action.
Bulls Need Reclaim of $0.1535 to Reverse Bearish Structure
To turn the tide in favor of bulls, they must push the price above the 20-day EMA at $0.1535. Subsequently, ALGO/USD will face stiff resistance at the 50-day SMA at $0.1599. If the price sustains above this level, it will suggest that the bears are losing their grip.
If the support level of $0.1457 gives way, we might see an exacerbation of the downtrend since there is not another relevant support until $0.10. This level would bring the price to a minimum not seen since October 2017. The last resorts for ALGO’s price would likely be around $0.002.
With the current momentum it looks like ALGO is going to stabilize somewhere between $0.1457-$0.1535 after this week’s sell-off, due to the overextended momentum readings and already six successful support tests. The ISO 20022 implementation schedule and the increasing self-custody adoption in the ALGO ecosystem should indicate that accumulating here requiring a bit of patience reflects positive risks for those convinced that eventually, the price should follow the value.
