Tezos price breakout now in doubt as the crypto market bleeds

Tezos (XTZ) price broke out on March 17 with a 9% gain on a 50% increase in average daily volume. It was the type of price action that bulls wanted after the long consolidation along the 50-day SMA. However, over the last five days, XTZ has been drifting lower and is currently trading below the downtrend line.

Tezos price narrative has flipped from bullish to neutral

The spike above the declining trendline has stalled at the March 9 high at $4.589 on two occasions. The negative days since the breakout have not been dramatic and on lower than average volume, introducing the possibility that XTZ could just be testing the breakout.

Moving forward, it is critical that Tezos price holds in the region of the 50-day SMA as it did in mid-March and late February. A daily close below the moving average, especially on high volume, would be a deviation from the price history since February and confirm a false breakout on March 17.

Downside projections are the 100-day SMA at $3.231, followed by the February 23 low at $2.920 where heavy price congestion extends back to January.

It should be noted that the last two powerful rallies from October 2019 to February 2020 and from March 2020 to August 2020 were followed by astronomical reversals averaging 68%. If a decline of that magnitude were to follow the December 2020 to February 2021 rally it would translate into a price target of $1.807.

XTZ/USD daily chart

Now, if bulls retake control of XTZ and rally it above $4.589, there is clear sailing until the topside trendline beginning in February 2020 at $5.280. No doubt the February high at $5.660 will also have a magnet effect and represent a gain of 29% from the original breakout.