The Algorand price has extended its gains, surging 20% in the last two days as ALGO becomes the latest cryptocurrency to break out of its downtrend. A bullish breakout has been brewing for the last week. But despite clearing trend line resistance on Friday and Saturday, the breakthrough finally arrived on Sunday. Furthermore, after jumping 9% on Sunday, the buying continued yesterday, and so far, today. As a result, the Algorand price has recouped all of the losses suffered in May’s collapse and, at $1.4750, is trading at a four-month high.
Over the last few days, the constructive price action has extended ALGO’s gains from the July low to 120%. This has lifted Algorand’s market cap to a new high of $5.10 billion, ranking it as the 34th-largest cryptocurrency, above IOTA (MIOTA). However, it has also lifted the short-term momentum indicators into overbought territory, which may put the brakes on the rally.
Overall, the daily chart paints a very constructive picture. The Algorand price has broken above an ascending trend line at $1.2010, which was previously a robust resistance level. Furthermore, ALGO has also cleared the horizontal resistance offered by the June high at $1.2700.
Additionally, the Moving Average Convergence Divergence Indicator (MACD) has flipped into positive territory, indicating that the moving averages are trending higher.
However, the Relative Strength Indicator (RSI) is looking stretched. The current reading of 77.41 suggests the price may struggle to maintain the current momentum. Therefore, if the Algorand price extends higher from here, it may run into selling. Although, during the February rally, the RSI was extremely elevated for 4 days before the price turned lower. On that basis, ALGO could advance towards the 6th of May high at $1.7600 before the rally exhausts.
As long as the price stays above the trend resistance-turned-support, I maintain a bullish view. Therefore, only a drop below $1.2010 would invalidate this opinion.
For more market insights, follow Elliott on Twitter.