- Zilliqa price has risen 540% from a two-year head-and-shoulders bottom.
- Volume is a red flag for the most recent upswing.
- Now, ZIL could enter a consolidation period before it targets new all-time highs.
A three-year cup base could be nearing completion, but the ideal scenario would be for Zilliqa price to consolidate before launching an assault on May 2018’s all-time high.
Zilliqa price sits in extreme overbought conditions
Key to the rally’s impulsiveness from the ZIL head-and-shoulders bottom has been the constant support at the 10-week simple moving average (SMA). Any healthy consolidation moving forward should find support at the moving average like what emerged during the flag pattern in January.
An ideal consolidation would take the form of a handle to complete a cup-with-handle base. Volume should decline through the left side of the handle and then spike as the digital asset breaks out. The pause would release the extreme overbought conditions on the Relative Strength Index (RSI) and raise the probability that Zilliqa price will achieve a sustainable breakout.
The first profit target is the 1.272 extension level at $0.834, or a 250% gain. The next profit target is the 1.618 extension level at $1.39. Volume must rush into the market to confirm the price.
ZIL/USD weekly chart
It is worth noting that the 10-week SMA, currently at $0.111, is critical for the bullish outlook to remain intact. Any consolidation needs to hold on a weekly closing basis, or a different pattern will develop.
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