Altcoin market capitalization fell below long-term horizontal level. This jeopardizes the legitimacy of the previous bullish breakout.
If altcoin capitalization doesn’t make a reversal soon, it could be fraught with sharp declines and a loss of previous gains.
Will Dogecoin (DOGE) and Shiba Inu (SHIB)
A severe test of faith in the altcoin season. Altcoin market capitalization (TOTAL2) showed aggressive growth during the week of April 10-17.
As the results of technical analysis show, the indicator has made a bullish breakdown of the line of long-term downward resistance, built from the historical maximum.
In addition, TOTAL2 broke above the $605 billion horizontal resistance area.. This indicated that the bulls had taken control and started a new bullish trend.
But as a result, this whole breakout turned out to be just a deviation (red circle). A week later, the indicator had already fallen below the $605 billion area and turned it into resistance.
This failure to consolidate growth is a bearish signal and jeopardizes hopes for an altcoin season.
The weekly Relative Strength Index (RSI), however, is still bullish as it stays above the 50 mark and rises.
This index is a momentum indicator, indicating the overbought/oversold market, depending on whether it is above or below the 50 mark. In this case, its dynamics suggest a continued bull market.
If the growth continues, the next resistance area will come into play around $916 billion and then around $920 billion.
If growth continues, the next area of resistance will come into play at $916 billion and then around $920 billion.
Meanwhile, the nearest support is formed by the line of previous downward resistance at $550 billion.
Altcoin Capitalization: Expect Downside
The daily chart is giving signals similar to the weekly timeframe. Here, the indicator since the beginning of the year is contained within the ascending parallel channel.
This pattern is considered corrective, so its northward direction suggests that the broader trend in the currency is bearish and that the price will eventually break south out of this channel.
The market rebound from the $605 billion area also coincides with the rebound from the center line of the channel that passes through here..
In addition, TOTAL2 is trading at the bottom of this channel, which further confirms the bearish mood.
And finally, the RSI at this timeframe is below 50 and is declining, also signaling a bearish trend.
So the most likely scenario seems to be a drop to the channel support line at $560 billion.. It will also confirm the relevance of the level of long-term resistance.
A rebound above the $605 billion area, however, could trigger a pump of altcoin capitalization toward the $730 billion channel resistance line.