Zilliqa, in particular, the 40th-ranked cryptocurrency by market capitalization, has seen a surge of 950% since the crash in March, which warrants an analysis of whether ZIL’s monster rally is finished or just getting started.
Crypto market daily performance. Source: Coin360
Zilliqa rallies towards $0.02 after hitting the bottom of $0.0022 in March
After Zilliqa hit its cycle low at $0.0022, the cryptocurrency rallied massively towards $0.02. That’s a surge of 950% and is one of the largest in recent times.
However, as the chart shows, the price of Zilliqa is currently inside a resistance area, in which it’s not expected to see a further move to the upside.
ZIL USD 1-day chart. Source: TradingView
As the chart is showing, the price of Zilliqa is back inside a range structure. The resistances of this range are found between the levels of $0.022 and $0.025, while the support levels are found at $0.012 and $0.014-0.015.
Does that mean that you’d be market buying the coin here as it has been performing well in recent periods? No, in trading, it’s always useful to chart and analyze the price action of a particular asset before you’d decide to trade.
In the case of ZIL, the upwards potential, short-term, is lower than a potential correction to the downside. So what levels should you be keeping an eye on?
Most likely, a corrective move towards $0.012-0.015 is not out of the ordinary and would provide a healthy, natural correction before a new impulse wave to the upside is ready to unfold.
The potential scenario for watching a trend reversal
A likely scenario for a trend reversal can be classified through a bearish divergence structure as shown in the chart.
ZIL/USD 1-day chart. Source: TradingView
Usually, an uptrend ends through signals from indicators in which a bearish divergence combined with a rising wedge (and generally against a resistance) is a significant signal for downwards momentum.
Hence, to sustain momentum upwards, the price of Zilliqa needs to remain above $0.019. If that succeeds, another push towards the resistance zones at $0.023-0.025 is likely to occur.
Traders should watch for a potential top structure in this resistance area, in which a bearish divergence would be one of the signals. In that regard, the last push regularly moves without volume or a decrease in volume. It makes a rising wedge, ending in a drop.
What are the interesting areas to watch in the coming months? The support areas around $0.012 and $0.014-0.016 should be watched for a potential buy-the-dip opportunity. If Zilliqa breaks above $0.025, the next resistance zone is found between $0.047-0.053.
The BTC pair of ZIL breaks out of 10-month accumulation range
ZIL/BTC 1-day chart. Source: TradingView
The BTC pair of Zilliqa is showing a constructive accumulation range of ten months. The breakout of this range caused a substantial rally as the price of Zilliqa rallied by 330% in the BTC pair.
What are the signals to see how these movements can occur? One of the significant signals for a potential surge to occur is the support found at the 100-day and 200-day moving averages (MA), which are a crucial indicator for bull/bear movements.
The next massive indication of further surges to the upside is the support/resistance flip at 0.00000095 sats as that level has been providing resistance for several months.
ZIL/BTC 2-day chart. Source: TradingView
The resistance of 0.00000095 sats has been tested several times in the previous year. The more often a resistance gets tested, the weaker the resistance becomes as sellers get exhausted. Since that support/resistance flip at 0.00000095 sats, the price has rallied substantially by 150%.
However, as significant rallies usually happen quickly, the retracement can take a while. It’s likely to expect a correction on Zilliqa, after which the previous support zones at 0.00000160-0.00000170 sats and 0.00000127-0.00000138 sats are potential areas to look for support.
But Zilliqa isn’t the only altcoin looking bullish. More charts are looking identical to ZIL prior to the breakout. One such crypto altcoin is Stellar Lumens (XLM), the 13th-ranked cryptocurrency by market capitalization.
Stellar Lumens to follow Zilliqa and break out of the accumulation range?
XLM/BTC 1-day chart. Source: TradingView
The BTC pair of Stellar Lumens is showing a clear range-bound structure. In this case, the accumulation range has been in place for almost a year.
Clear confluences with the Zilliqa chart in which the 100-day and 200-day MAs are acting as support since May. Next to that, the resistance zone has been tested multiple times. A renewed test of this resistance should lead to a breakout.
As the price is compressed inside such a long-range, a breakout will lead towards massive volatility and substantial upwards momentum. Potential next resistance zones are likely to be at 0.00001200-0.00001250 and 0.00001525-0.00001600 sats.
What to look for? Once the resistance area between 0.00000860-0.00000910 flips for support, a trigger is given for potential further upward continuation.
USD pair of XLM ready for a surge towards $0.14?
XLM/USD 1-day chart. Source: TradingView
The USD chart of Stellar Lumens is showing many similarities with the BTC pair. Strong uptrend since the crash of March 12, while the resistance area has been tested several times as well.
As long as the support zone at $0.071-0.0725 holds, further continuation to the upside is likely. Furthermore, the $0.085-0.087 area has been serving as resistance for a year. The next test of this level should result in a breakout to the upside. Targets are defined with horizontal levels, which are $0.11 and $0.14-0.15.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Joseph Spezzano received a Masters Degree in computer science from The University of Massachusetts. Joseph has been working as a full-time blockchain programmer for the past 5 years. In his spare time, Joseph enjoys writing for CryptocurrencyInvestments.com and traveling.