The recent strength of the Tezos (XTZ) market threatens to dry up as the classic bearish pattern has been activated.
This pattern is known as the “ascending expanding wedge” and occurs when price fluctuates between two bullish but diverging trend lines. According to creator Thomas Bulkowski, this wedge pattern doesn’t highlight buy-side burnout, but rather expresses a seller’s ambition to take control, meaning buyers tend to lose the upper hand every time.
XTZ’s 250% rally from the July low of $ 2.08 created a rising, expanding wedge. Yesterday (September 13th), XTZ tested the pattern’s upper trendline at $ 7.50 (resistance level) to seek for a widening of the bullish momentum towards the previous ATH of $ 8.76.
Daily frame XTZ price chart that sets an ascending, expanding wedge pattern | Source: TradingView
But the price corrected and confirmed strong selling sentiment near the wedge resistance area. There is now a risk that the correction will extend towards the lower trendline of the wedge (near $ 5) based on similar pullback moves seen since July 2021.
As a general rule of the ascending expanding wedge, price will eventually drop below the lower trendline and target the lowest point, which in this case is around $ 2.38.
Aim for XTZ nêm wedge pattern | Source: TradingView
Central cards Note that nearly 80% of the breakouts from an ascending, expanding wedge are bearish. Meanwhile, the price slid six times out of ten towards the downside.
The basics tell a different story
Although XTZ is struggling with an odd technical setup, it hopes to remain optimistic based on the introduction of the Tezos blockchain.
American musician, rapper and singer Doja Cat recently released her NFT collection on OneOf, a digital marketplace for art collections that runs on the Tezos blockchain. This announcement coincides with a 42.65% increase in XTZ during the trading sessions on September 9th and 10th.
Doja Cat .s NFT collection | Source: OneOf
The NFT market has become one of the most heavily traded markets this year. OneOf’s biggest competitor is OpenSea, which recorded approximately $ 3.4 billion in transactions in August.
Ethereum is now home to most of the NFT projects, but high transaction costs have become an ominous point. As a result, many new NFT projects have opted for cheaper Ethereum alternatives.
For example, Solana’s SOL is up 825% from its July 20 low, largely due to the success of Degenerate Ape Academy, an NFT project, followed by Sam Bankman-Fried’s decision to trade the Solana Exchange’s FTX on your NFT platform.
A similar trend has helped increase the demand for XTZ over the past seven days.
Last month, Tezos also received a boost from a number of Europe-based blockchain and finance companies such as Crypto Finance Group, InCore Bank, and Inacta. They announced that they will be using Tezos’ DAR-1 token standard to issue their native tokens.
Additionally, InCore announced plans to introduce storage, staking and trading at the institutional level for XTZ, increasing the chances that high net worth investors will want to invest in XTZ in the near future.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Cointelegraph