XTZ/USD has touched its highest price level of $4.41 for the first time in over a year but could retreat to a $4.00 support area following the formation of the wedge pattern
Tezos price is facing a short term reversal after extending its weekend upside with a surge to highs of $4.40 on Monday.
As of writing, Tezos is trading at around $4.18 against a slipping US dollar, however a red candle on the four-hour chart suggests a pullback is underway. The price of the 12th ranked cryptocurrency by market cap is up by 14.8% against the fiat pair in the past 24 hours.
Tezos technical outlook
Tezos bulls still have room to add another leg to the recent uptrend that saw them shatter multiple resistance levels at $3.40, $3.60 and $3.80. However, a look at the technical picture shows bears are confronting buyers, with prices likely to reverse, as signaled by the formation of a rising wedge pattern.
Wedge patterns help traders determine the likelihood of a reversal, although analysts like to use the indicator alongside other price indicators, such as the Relative Strength Index and the MACD. This helps confirm or invalidate the pattern.
For XTZ/USD, a rising wedge has formed, as shown on the chart below. This suggests that prices are likely to drop, a scenario also suggested by a down sloping RSI and the MACD that has moved closer to the mean line.
The RSI’s sharp downward turn suggests bears are strengthening near $4.15 and if the MACD confirms the bearish divergence, bulls will rely on support at the 50 SMA and 100 SMA levels at $4.00 and $3.84 respectively. The next support zones are at previous resistance areas near $3.60 and $3.40.