Algorand Breakout - More upside to come?
The popular decentralized network Algorands native cryptocurrency Algo, has seen a move of more than 40% over the last couple of days. While we often see these kinds of moves on various altcoins, this recent move may prove to be the beginning of further upside. Read on for more details.
The cross ALGO/USD has been trading in a range between the 0.2750 – 0.3830 levels since the beginning of June and up until yesterday. In this range, the cross had a value area low of 0.2880 and a value area high around 0.3550.
Yesterday, ALGO/USD broke this range and moved all the way up to the 0.4100 level. Since this move, the price has stayed above the value area high of the current range. We did see a move back to test a high volume node at 0.3648, and since then, it has continued its move to the upside.
I'm not a fan of trading a breakout, especially after a move of 40% to the upside. However, with a break of the value area high, further upside is definitely possible. Usually, I would prefer to wait for a retest of the golden pocket to look for a possible long, but not in this case. A retest of the golden pocket would mean that the pair would be trading back into the old range, which would invalidate the breakout.
We did have a retest of the high volume node at 0.3648, which now aligns perfectly with the 0.382 Fibonacci retracement level. Another critical level to keep in mind is the POC of the recent move to the upside. The point of control is currently placed at 0.3743.
I think these two levels are solid places to look for long entries. The trade would be invalidated if we move back into the old range – and stay there. Note that we can easily see a wick into the range and then continue to the move to the upside. But if we see the price move back into the range and stay there, I would close the trade.
The value area high of the downtrend is placed all the way up around the 0.92 level, where my initial target for this swing trade would be set. With that in mind, the possible risk: reward for this trade is very favorable.
Take a look at the snip above. While it may seem crazy to enter a long trade after an initial 40% move, you can see the potential risk:reward of this trade is very favorable. There is, of course, no guarantee this will play out, but with the recent break, I think further upside on this cross is very likely. If you make sure to place a stop loss, why not give this a go?