A major rally in waves price (WAVES) this week is likely to stall in the coming sessions on a “death cross” technical pattern.
WAVES down 85% after “Death Cross” in 2018
A “death cross” occurs when the long-term moving average closes above the short-term moving average of an asset.
Notably, on the weekly chart of WAVES, the 50-week exponential moving average (red wave) made a bearish crossover above the 20-week EMA (green wave) in the week ended February.
Weekly frame WAVES/USD price chart with “Death Cross” | Source: TradingView
It was the first “Death Cross” to appear on WAVES’ weekly chart since June 2018.
Historically, WAVES has fallen as much as 85% after forming a “death cross” in 2018, despite briefly closing above the 20-week and 50-week EMAs in impressive fake recovery moves.
Therefore, despite its best weekly performance since April 2018, WAVES’ recent gain remains a long-term downside risk. Therefore, a decline in WAVES price below the 20-week and 50-week EMAs could trigger another sell-off.
WAVES, the native token of the blockchain platform of the same name, surged up as much as 88% on the week and hit over $21 over the weekend.
As Cointelegraph previously noted, this first quarter’s move to Waves 2.0, a partnership with compatible blockchain service provider Allbridge, and a $150 million ecosystem fund served to accelerate Waves’ growth in the United States, as the main catalyst that led to the explosion of WAVES.
However, signs of a correction have appeared as the price has fallen almost 10% from the local high of $21 hit on Saturday (March 4).
Interestingly, the inflection point coincides with the 1.0 Fib line of the Fibonacci retracement chart, created from the 21.6 swing level to the 0.54 swing level and considered important during the January 2018 corrections resistance line functioned. , April 2021 and November 2021 – as shown in the table below.
Weekly frame WAVES/USD price chart has “critical resistance” | Source: TradingView
For example, in April 2021 and November 2021, the bulls attempted to hold $21.6 as support but failed. As a result, WAVES has spent most of its time below the previously mentioned 1.0 Fib level, which indicates an unstable bullish sentiment.
Fibonacci shows that WAVES will see a decline towards the next support levels of $17, $13.5 and $11. Conversely, a decisive move above $21.6 can lead the bulls to retest above $34.5.
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According to Cointelegraph