Bitcoin (BTC) and the broader cryptocurrency market are taking a breather after the May 31 rally. Meanwhile, most altcoins continue to be severely oversold, with most of them 70-90 percent below their all-time highs. What is clear is that fear is everywhere. Risky markets suffer around the world, but it is precisely in such conditions that the opportunities for professional money to accumulate, according to experts. Jon Morgan, an analyst, has discussed three altcoins that could rally if the broader market enters a new uptrend. Here’s what to expect…
ADA may be poised for an 80 percent increase
altcoin Cardano (ADA) is getting a major bullish update very soon. As Cryptokoin.com reported, the highly anticipated Vasil hard fork, which improves performance and adds more Plutus enhancements, is scheduled for June. From the perspective of price action, ADA is positioned in a strong price range that will support any upside movement experienced by the broader market. Within the Ichimoku Kinko Hyo system, a technical analysis system, ADA provided a significant gap between the bodies of the last three-week candlesticks and Tenkan-Sen.
When candles and Tenkan-Sen’s bodies have visible gaps, a correction usually occurs within three to four days, according to the analyst. This is because the balance is mismatched, Tenkan-Sen and price action like to stick together as much as possible. When one gets too far away from the other, an average return to Tenkan-sen is extremely likely.
However, if the broader cryptocurrency market takes a big leap forward, the ADA price may surpass Tenkan-Sen to test Kijun-Sen. “ADA has not tested the weekly Kijun-Sen since the week of November 8, 2021. The weekly Kijun-Sen level is at $1.02 and includes the 2021 volume control point and the 50 percent Fibonacci retracement from the January 25, 2021 low of the all-time high.”
MATIC targets $1
Looking at the weekly chart of Polygon (MATIC), the analyst draws a similarity between ADA and MATIC. MATIC and ADA both retail for $3. Both stayed in the 0.50 – 0.60 range, but that’s where the similarities mostly end, according to the analyst. Basically, Morgan points out that MATIC remains strong. Governments around the world have tried to restrict or ban PoW Blockchains due to excessive energy costs for them. “MATIC is likely to avoid government scrutiny and attract supporters as a positive example of environmental stewardship,” Morgan says.
According to the continuation of the analysis, there are significant gaps between the bodies of MATIC’s weekly candlesticks and Tenkan-Sen, just like ADA. However, MATIC’s gaps are more important. Likewise, the difference between price and Kijun-Sen is much more meaningful. In the Ichimoku Kinko Hyo system, there is a maximum average at which price will move away from Kijun-Sen before experiencing a violent return to average. For MATIC, this threshold is 63 percent. Any renewed bullish momentum for Bitcoin could push altcoins higher until MATIC hits the $1.00 to $1.15 value area near weekly Tenkan-Sen, according to Morgan.
XLM lagging behind in the altcoin market?
It is sometimes forgotten that during the last major bull run from the COVID crash to November 2021, there were a few major altcoins that did not reach their all-time highs. Stellar (XLM) is one of them. In fact, the last time XLM set a new all-time record was January 8, 2018. Something that XLM’s other weekly charts lack is a very clear falling wedge pattern. The most powerful of the standard rectangular and triangle patterns in technical analysis is the wedge pattern.
According to the analyst, what makes the pattern so strong is the lower possible false breakout. The most likely direction for a falling wedge is higher – but breaks below a falling wedge can provide strong short opportunities. The typical behavior that analysts and traders expect to see with a failed falling wedge is a sudden and quick sell, but so far the bears have not been able or willing to do so.
If the bullish momentum returns to the crypto market, XLM will likely reach the second top of the falling wedge near the $0.38 value area. Morgan concludes his analysis with the following statements:
Classical technical analysts believe that techniques lead to fundamentals. If this is true, altcoins like XLM, MATIC and ADA could be positioned in very desirable conditions in case of any new bull run. However, downside risks remain a cause for concern […] If no new uptrend occurs before the end of June, the cryptocurrency market will likely move sideways until a major breakout higher or lower occurs in the Autumn.
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