Get up to date on the latest analysis and trading tips with our Crypto update week 50
- What Needs to Happen for Axie Infinity to enter a New Bull Phase
- Solana Imminent Breakout after BB Squeeze Signal Emerges
- Toncoin Eyes $3, But RSI Sets Record for Most Overbought Reading Yet
- Lido DAO Holds Key Support at the $1.00 Psychological Level
It’s over a year since Axie Infinity (AXS) printed its all-time high of $166, and since then, the price of the cryptocurrency has been trading in a logarithmic descending channel pattern. Based on this pattern alone, the Axie Infinity bull market can return under one condition — a daily break and close above the middle of the channel.
AXS Logarithmic Channel
The AXS logarithmic descending channel contains the price within two downward-sloping trendlines. Following the retest of the channel’s bottom in mid-November, AXS’s price bounced and is now rejecting the middle of the channel.
The middle of the channel also aligns with the $10 psychological level, making it more significant to watch. Additionally, AXS’s price couldn’t break above the middle of the channel since May 2022, acting as a strong resistance on the way down.
The lower part of the channel is a bearish zone, so a daily break and close above this level will signal a major shift in the market sentiment.
RSI Trendline
For now, the AXS price has failed to break the daily Relative Strength Index (RSI) trendline that connects the peaks in momentum since the inception of the logarithmic descending channel pattern. This plays against the bullish case scenario, which is why we need the RSI to break this trendline for the AXS price to enter a new bull phase.
Looking forward: Long-term support remains at the bottom of the channel at around the $5.00 mark, while the top at around the $20 mark remains the key resistance level.
After weeks of muted trading, Solana (SOL) could be poised for an imminent breakout as the Bollinger Bands squeeze signal shows up on the daily chart. In addition, the Relative Strength Index (RSI) indicator has generated bullish divergence, pointing to further gains.
Bollinger Bands Squeeze Signal
The Bollinger Bands squeeze occurs when the upper and lower band squeeze together, creating a very narrow trading range. These periods of low volatility are often followed by breakouts. One of the core tenets of technical analysis states that prices always move from periods of contraction to periods of expansion.
If the breakout is above the upper band, the price usually has a higher probability of continuing upwards.
RSI Divergence
While the BB squeeze doesn’t tell us in which direction the breakout will occur, the RSI displayed a potential bullish divergence that may favor a breakout to the upside. The RSI has not confirmed the new lower low in November; instead, it printed a higher low, a bullish signal of an upcoming trend reversal.
As long as the cryptocurrency consolidates and holds the downside above the $11 swing low, a breakout to the upside has a higher probability of materializing. Additionally, the FTX-driven sell-off from the beginning of November has left behind liquidity gaps that have the potential to be filled.
On the upside, we don’t have much resistance besides the $20 psychological level and a technical resistance level that comes at the $27 level.
Telegram’s Toncoin (TON) may be leading in crypto market gains, but its daily Relative Strength Index (RSI) is currently at the most overbought reading in its history. However, as the TON price is battling the middle of an ascending channel, a breakthrough could expose the upper channel resistance trendline, which aligns with the $3.00 psychological level.
RSI Overbought
As of December 15, the daily RSI stands at 84.96, which marks the highest point ever on the daily chart and is well above the classic overbought reading of 70. The previous highest RSI reading was recorded earlier this year on October 26.
During the previous run in October, TON’s price was also testing the middle of the ascending channel, just like today’s price action. At that time, after TON reached the RSI overbought signal, its price sold off to retest the bottom of the channel.
TON Ascending Channel
From a technical perspective, TON’s price action is moving inside an ascending channel, which can guide future price movements. If we project to the upside of the same price range we experienced between the middle of the channel and the channel’s support, then we could expect a 61% rally.
A rally of this magnitude would send TON’s price to the top of the channel, right around $3.00.
Looking forward: Prices in the middle of the channel, between $2.50 and the $2.00 were once key resistance levels, but now act as support levels. These are the prices to watch on the way down.
Lido DAO’s (LDO) price continues to hold firm above the key $1.00 support level, hinting towards a bullish reversal signal. Additionally, the pennant pattern breakout has opened up an upside toward the supply zone between $1.55 and $1.65.
$1.00 Big Psychological Level
Since the FTX-driven crash, LDO’s price has held above the $1.00 psychological level, which has proven to be a strong support level. Given the current bounce off of the $1.00 level, the LDO price has entered bullish territory.
Pennant Pattern
Additionally, recent LDO price action has led to the formation of a completed pennant pattern. While pennant patterns are often perceived as continuation patterns, a break to the upside can also result in a reversal pattern.
A bullish measured move target will send the LDP price around the $1.60 level, which is also a key supply zone. This price zone is significant because it’s the price that LDP was trading before the FTX-induced crash.
RSI 50 Midpoint Breakout
At the same time, the daily Relative Strength Index has also broken above the 50 midpoint — a signal that often shows a shift in the market sentiment from bearish to bullish. This adds more confluence to the bullish case scenario and reinforces the pennant pattern breakout.
