WAVES price has rallied to a historically significant level of resistance, raising death cross fears.
A major rally in WAVES price this week that saw it nearly double risks faltering in the coming sessions due to a “death cross” technical pattern.
A death cross measure appears when an asset’s long-term moving average closes above its short-term moving average.
Notably, on the WAVES’ weekly chart, its 50-week exponential moving average (50-week EMA; the red wave) jumped above its 20-week exponential moving average (20-week EMA; the green wave) in the week ending Feb. 21 — a bearish crossover.
That is WAVES’ first “death cross” occurrence on a weekly chart since June 2018. In both cases, the correction in the WAVES market appeared due to selloff across the broader crypto market following a massive bull run.
As it happened, WAVES fell by up to 85% after the 2018 death cross formation, despite briefly closing above both its 20-week and 50-week EMAs in impressive but fake bullish rebound moves.
Therefore, WAVES’ latest upside retracement, albeit its best weekly performance since April 2018, still treads under long-term bearish risks. As a result, a price drop below the 20-week and 50-week EMA could spell another selling round in the market.
To recap, WAVES, the native token of a blockchain platform of the same name, rallied by as much as 88% week-to-date to reach over $21 apiece during the weekend.
As Cointelegraph covered earlier, migration to Waves 2.0, partnership with interoperable blockchain service provider Allbridge, and an upcoming $150 million fund to boost Waves’ growth in the U.S. served as tailwinds to WAVES upside boom.
Related: 3 reasons why Waves price gained 100%+ in the last week
But signs of correction have emerged as WAVES falls nearly 10% from its local top near $21 this Saturday.
Interestingly, the inflection point coincides with the 1.00 Fib line of the Fibonacci retracement graph made from the 21.60-swing high to 0.54-swing low, which served as key resistance during January 2018, April 2021, and November 2021 corrections — as shown in the chart below.
For instance, in April 2021 and November 2021, bulls attempted to flip $21.60 as support but failed. As a result, WAVES has spent most of its time under the said 1.00 Fib level than above it, suggesting an unstable upside sentiment around it.
The Fibonacci fractal suggests that WAVES would undergo a pullback move toward its next line of supports near $17, $13.50, and $11. Conversely, a decisive move above $21.60 could have bulls retest levels above $34.50.
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