Tezos set to collapse like a house of cards

Tezos (XTZ) price held some good cards over the weekend as a bullish triangle was underway with the monthly pivot at $1.66 and a technical moving average just above set for the taking. The bullish setup is vanishing as sentiment got a turn on Monday morning, with ASIA PAC in deep negative numbers as China has locked down a few big-city blocks in Shanghai, adding to more supply chain issues. Add that to the energy crunch in Europe and speculation on higher inflation in the US and you see the tone setting for a bear market where cryptocurrencies are the least favourite segment investors want to be in.

XTZ faces headwinds from global markets

Tezos price has been trying to break above the base of the bullish triangle at $1.66, which is the monthly pivot for July at that level. Unfortunately, bulls needed three tests and failed, in the end, to break above the level and try to attack the 55-day Simple Moving Average (SMA) that comes in just above the pivot at $1.70. Seeing that XTZ price action is taking a step back, together with the significant drop in the stock market, expect this trade to wobble and possibly collapse.

XTZ price will signal the end of this bullish triangle when the green ascending trend line is broken to the downside. With six confirmed tests for support, this trend line is massively important, and thus when it breaks, will send a signal to traders that should not be ignored as a steamrolling reversal will happen. XTZ price will pare back all gains and drop back towards $1.30, erasing all gains on the docket for July, and could even overshoot towards $1.20, testing new lows for the year.

XTZ/USD Daily chart

With a correction this early in the week, a turnaround gets triggered often later in the week. That would mean that after this selloff, the worst is over for Tezos for this week, and it could only see a further squeeze to the upside with a break above the monthly pivot and the 55-day SMA. This would open some room for an extended area towards $2.10 with the monthly R1 resistance and the upper side of the longer-term trend channel in play to cap price action for now.