What you should know about OMG risking a breakdown from its up-channel

What you should know about OMG risking a breakdown from its up-channel

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

OMG, at press time, was approaching a key price zone and looked extremely vulnerable to a breakdown. Meanwhile, receding trading volumes, bearish divergences along with the RSI, and a weakening Awesome Oscillator presented some more cracks in OMG’s armor.

At the time of writing, OMG was trading at $16.5, down by 7.7% compared to yesterday’s close.

OMG Hourly Chart

OMG has been outperforming most of its peers since late September. The altcoin embarked on a massive rally from $8 to a multi-year high of $18.27 in less than 10 days, with only a couple of pitstops in between. However, an up-channel appeared once the buying frenzy cooled off. From here, bulls would be under a lot of pressure to maintain this streak of higher lows, especially since the trading volumes took a massive hit.

A close below the $15.5 swing low could lead to a potential breakdown from the pattern and drag OMG to lower price levels. Buyers can look to counterattack at the 38.2% and 50% Fibonacci levels in order to preserve OMG’s uptrend.

On the other hand, a rebound from the 23.6% Fibonacci level would see OMG set a higher high if bulls are able to successfully negotiate past the mid-line of the pattern (white dotted line). An upwards breakout could even see OMG challenge the $20-$21 price ceiling. It has historically been a tough nut to crack.

Reasoning

Bearish signals were beginning to seep into the OMG market, as per the RSI and Awesome Oscillator . The RSI broke below its mid-line and a run down to the oversold territory was a potential threat.

The Awesome Oscillator was also unable to hold above its half-line as momentum shifted over to the sellers. Meanwhile, the constricted nature of the Bollinger Bands hinted at an incoming price swing over the coming sessions.

Conclusion

With a variety of signals available to sellers, OMG risked a breakdown from its up-channel. Buyers faced a lot of pressure to keep OMG above $15.5 and a stronger reaction can be expected at the 38.2% and 59% Fibonacci levels.

In the unlikely event of an immediate rebound, OMG would snap a higher high around $18.5-$18.7.

Source