LEO Tests Critical Support at $8.15 as Momentum Exhaustion Signals Potential Reversal Zone
Market Structure Shifts Lower
- LEO is trading at $8.15, down 15.1% for the week.
- This loss wipes out the December recovery and 35% of November gains.
- Monthly gain is now only 2.2%.
LEO dropped from a high of $9.89 to $8.15, a 17.6% decline that erased nearly three weeks of gains in just seven trading days. The -15.1% decline for the week is one of the sharpest selloffs of the past few months, with the price action challenging former support regions that held in the fourth quarter. The looming question for markets is whether $8-8.50 is enough to attract buyers for a relief rally, or if this momentum wane indicates an extended retracement and potential further consolidation.
| Metric | Value |
|---|---|
| Asset | UNUS SED LEO (LEO) |
| Current Price | $8.15 |
| Weekly Performance | 11.36% |
| Monthly Performance | -15.10% |
| RSI (Relative Strength Index) | 42.9 |
| ADX (Average Directional Index) | 47.1 |
| MACD (MACD Level) | -0.39 |
| CCI (Commodity Channel Index, 20-period) | -51.86 |
RSI Drops to 42.89 – First Oversold Warning Since October’s Washout
With the oscillator reading of 42.89, traders are presented with the primary legitimate oversold sign for almost 3 months. This level mirrors the last October bottom when LEO bounced from comparable RSI readings physically thirty, which began the rally and ultimately saw $9.89 forged in the spot. The weekly RSI paints an even more spectacular picture at 35.81, confirming seller exhaustion on the greater time horizons.
What is interesting is the speed at which momentum swung the other way – just a fortnight ago, the daily RSI was comfortably above 60 as bulls made a run at $10. For swing traders, this balanced-to-overbought swing sets up the typical scenario where the patient buyers begin to step in, although the usual falling knife precautions apply to this setup.
ADX at 47.06 Confirms Mature Downtrend Nearing Exhaustion Point
The strength of the trend is indicated by an ADX reading above 47.06. Greater than 45 ADX indicates that the current trend is a strong one. A very low ADX value that is near or below 10 signals a non-trending market. ADX is used to quantify trend strength. ADX readings above 45 are best interpreted using it in conjunction with another measure of trend strength or directional movement to help confirm the entry or exit signal.
In other words, the ADX suggests that we are at the end of this selloff rather than the start of it. The +DI of 10.55 versus the -DI of 35.84 shows that the bears are in complete control, but these lopsided situations often signal capitulation phases. So, contrarian traders will be ready for possible snap-back rallies as this extreme trend plays out, especially if the price remains above the $8 level.
20-Day EMA at $8.58 Flips From Support to Resistance After December Breakdown
When looking for a potential bottom, the 61.8% Fibonacci retracement is the first logical area at the $7.50 level. This coincides with historical support seen at the end of September and could be an area that brings in a relief bounce. If it doesn’t hold, another swift move down to the 78.6% retracement and previous support at $6.50 seems likely.
The most notable development is the 20-day EMA flipped from solid support to strong resistance, which blocked recovery efforts three times last week before downside pressure overwhelmed the market and drove prices to present levels. The 50-day EMA at $8.78 becomes the next key resistance level on any bounce, with the far-off 200-day EMA at $9.17 establishing the resistance that must be broken to alter the overall trend.
Monthly Pivot at $9.42 Marks Distant Resistance as Support Crumbles Below $8.22
There is strong resistance between the current price and the monthly pivot at $9.42, as repeated efforts to hold above $9 have led to long positions becoming trapped under this level. The short-term resistance range is $8.58 (20-day EMA) to $8.78 (50-day EMA), which is a 7.5% rise and would need substantial demand to be breached.
Bullish traders are left clinging onto the $0.20 handle after XRP/USD sustained its seventh consecutive day of losses. Despite faring better earlier in the week, XRP/USD has not been spared the beating which has affected Bitcoin and other major altcoins this week. The price is now floating just above the $0.20 level after a failed bounce from $0.205.
The market structure still appears weak and calls for caution. Only a shadow above $8.58 would suggest potential shift in momentum. The pattern of lower highs, from $9.89 to $9.37 to $8.93 so far, outlines the ongoing downtrend, with each rally capping out at a lower level. The flex-fuel tax break on corn ethanol is likely to get extended; and although that could offer fundamental support; technically, focus remains on the 20-day EMA.
A close above $8.25 inter-session high is a possible first sign of reaching exhaustion of the selling wave but only a decisive close above the 20-day EMA would indicate this.
Recovery Requires Decisive Close Above $8.58 to Shift Near-Term Momentum
Buyers need to be aware of the 50-day EMA level at $8.75 acting as additional resistance. All in all, the immediate risk remains to the downside. Any breach below $8.41 would leave price vulnerable to retesting the $8.34 level seen on September 3. Subsequent support aligns at the $8.25-$8.27 range from early June.
If LEO loses support at $8.00 on a closing basis, the bearish scenario will play out. The breakdown will then be directed to the subsequent key support at $7.01 (monthly S2 pivot), which will be about 14% below the current level. If $8 gives way, it will probably trigger sell-stops and a further selloff to yearly lows around $6.20.
The oversold conditions in multiple timeframes and ADX extremes hinting at trend exhaustion, the most likely near-term scenario is an LEO consolidation zone between $8.00-$8.58 as momentum indicators unwind from oversold levels. Keep an eye out for a decrease in selling volume and possible bullish divergences upon any retest of $8.00 support.
