bitcoin (BTC) and the broader cryptocurrency market are taking a break from the May 31 rally. Meanwhile, most altcoins remain heavily oversold, with most between 70% and 90% below their all-time highs.
What is clear is that fear is everywhere and the blood is in the water. Risky markets are hurting around the world, but it’s exactly these types of conditions that create opportunities where professional money is piling up and adding to positions.
Let’s take a look at three altcoins that could be positioned for a rebound if the broader market enters a new uptrend.
ADA could prepare for an 80% increase
Cardoon (ADA) has a significantly bullish update coming very soon. The long-awaited Vasil hard fork, which increases performance and adds more Plutus improvements, is scheduled for June.
From a price action perspective, ADA is positioned in a solid price range that will likely support any further upside the broader market has seen. Within the Ichimoku Kinko Hyo system, ADA maintained a large gap between the bodies of the last three weekly candlesticks and the Tenkan-Sen.
When the candlestick and Tenkan-Sen bodies show noticeable gaps, a correction often occurs within three to four days. This is because the equilibrium is out of sync, the Tenkan-Sen and the price action like to stay together as much as possible. A medium return to the Tenkan-sen is extremely likely when one strays too far from the other.
However, if the broader cryptocurrency market experiences a big rebound, ADA price can exceed the Tenkan-Sen to test the Kijun-Sen. ADA has not tested the weekly Kijun-Sen since the week of November 8, 2021.
The weekly Kijun-Sen is at $1.02 and contains the 2021 volume control point and the 50% Fibonacci retracement from the all-time high to the January 25, 2021 low.
MATIC aims for $1
Looking at Polygon’s weekly chart (MATIC), we can’t help noticing that it looks surprisingly similar to ADA. MATIC and ADA both sold from $3 and both are stuck between $0.50 and $0.60, but that’s where the similarities mostly end.
Basically, MATIC stays solid. Governments around the world have attempted to restrict or ban mining due to excessive energy costs for proof-of-work blockchains and MATIC is likely to avoid government scrutiny and attract supporters like a positive example of environmental stewardship.
Like ADA, MATIC has significant gaps between the bodies of its weekly candlesticks and the Tenkan-Sen. However, MATIC’s shortcomings are more significant. Likewise, the gap between the price and the Kijun-Sen is much more significant.
In the Ichimoku Kinko Hyo system, there is a maximum average that the price will move away from the Kijun-Sen before experiencing a violent reversal of the average. For MATIC, this threshold is 63%.
All new ifor bullish momentum Bitcoin will likely see MATIC lead the altcoins higher until it hits the $1.00-$1.15 value zone near the weekly Tenkan-Sen.
XLM is late to the altcoin market, but it’s known for its surprises
Sometimes it’s hard to forget that during the last big bull run from the COVID crash to November 2021, there were some big altcoins which has not reached new all-time highs. Stellar (XLM) is a. In fact, the last time XLM hit a new all-time high was the week of January 8, 2018, almost four and a half years ago!
One thing XLM has going for it that few other weekly charts have is a very clear descending wedge pattern. Of the standard rectangle and triangle patterns in technical analysis, wedge patterns are the most powerful. What makes his wedge so powerful is the probable downside of the false breakout.
The most likely direction for a falling wedge is higher, but breakouts below a falling wedge can generate powerful short opportunities. The typical behavior that analysts and traders would expect to see with a failed falling wedge is an immediate and quick sell off, but so far the bears have been unable or unwilling to do so.
Instead, XLM’s weekly chart shows a very high probability of a fakeout. If bullish momentum returns to the cryptocurrency market, XLM is likely to hit the second high of the falling wedge near the $0.38 value area.
Traditional technical analysts believe that the technicals lead the fundamentals. If this is true, then altcoins like XLM, MATIC, and ADA could be positioned in very desirable conditions should there be another bull run.
However, the downside risks remain a concern, but they are probably extremely limited. If a new uptrend does not materialize before the end of June, the cryptocurrency market will likely move sideways until a major upside or downside breakout occurs in the fall.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.