The Algorand price has reached a crucial support level that will decide the immediate fate of the ALGO token.
Like most of the market, Algorand (ALGO) is deep in bear country in December. Over the last month, the layer-1 token has fallen over 55%, wiping close to $5 billion from the project’s market cap. Several bearish macro developments are weighing down the cryptocurrency market at the moment. The most significant headwind is the Fed’s hawkish stance and accelerated taper timeline. Furthermore, potential contagion risk from the Evergrande default is undoubtedly adding to risk-aversion.
As a result of the recent weakness, Algorand marked a daily close below the 200-Day Moving Average at $1.374 for the first time since August. In my opinion, a second daily close below the long-term indicator could encourage liquidations. Therefore, today’s price action could be significant.
ALGO Price Forecast
Whether the Algorand price finishes today above or below the 200-DMA could produce a binary outcome. A close above the indicator would alleviate the immediate bearish pressure, potentially causing a short-covering rally towards $1.820 (100-DMA).
On the other hand, a close below will confirm the bearish breakdown. In that event, I expect selling to accelerate the price into the $0.900-$1.000 range.
ALGO is currently changing hands below the 200-DMA, suggesting the bearish scenario will play out. However, that could easily change by the end of the play this evening. Therefore, I am cautiously bearish at the current price, awaiting confirmation from the fully formed daily candle.
Algorand Price Chart (Daily)
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