Altcoins appear to be encouraging consolidation trends as they have successfully defended an essential support level within the weekly charts, even as the overall market tries to recover key moving averages. The current trends within the altcoins seem to indicate that the current correction within the overall altcoin market may not represent the initiation of a bearish turn within an overall uptrend.
Altcoin Market Holds Key Support Zone
From the weekly chart shown by market analysts, the cumulative altcoin market has successfully rested upon a major support zone, which earlier served as a resistance level during the previous market cycles. This level marks an important “area to hold,” which triggered increased buying pressure and resulted in a strong spike to the upside.
Its defense is quite meaningful in this regard, as it reinforces the fact that there are higher lows on a macro timescale basis, thus making the uptrend framework intact despite the pullback.
Also Read: Altcoins Flash Bullish Divergence on Weekly Charts, Signaling Potential Trend Reversal
Rejection at the Weekly 21-Moving Average
After bouncing from support, the alternative coin market made an attempt to reclaim the 21-day moving average (21-MA), a popular trend-following indicator. In this case, a setback at this level resulted in a temporary retreat.
It has been observed that this rejection is very usual during the initial or mid-term phase of an uptrend. The fact that the price did not break past the 21-MA range confirms that the trend is still in the process of consolidation.
Consolidation Signals Market Stability
The current sideway market activity represents a cooling-off period following the initial bounce. The volume activity on the charts indicates less selling pressure, but the key ‘dip-buying’ areas are still holding. It means that traders are accumulating instead of dumping their positions.
Historically, similar consolidation phases below the 21-week MA have often preceded renewed upside once momentum rebuilds.
Broader Trend Still Points Upward
Although there is a moment of hesitation in the short term, one thing is clear from the graph: so long as the market cap of the altcoin market is sitting above its support level, a break is less likely than a continuation.
The breach above the 21-week MA is expected to provide a confirmation signal for the continuation of the trend and will pave the way for rallies in several altcoins.
Also Read: Altcoin Market Shows Early Signs of Reversal as 20-Day MA Breakouts Emerge
