Saturday, September 23, 2023

Zilliqa Metaverse Hype Ensues, But ZIL Looks Exhausted

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Key Takeaways

  • Zilliqa has risen by nearly 370% over the past week. 
  • Now, sell signals are appearing.
  • A spike in profit-taking could push ZIL to $0.155.

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Zilliqa has soared in price over the past week. Although trading volumes remain high, several signals point to a brief correction in the near future.

Zilliqa Looks Primed to Retrace

Zilliqa has outperformed the rest of the cryptocurrency market over the past few days, but the technicals show that a spike in profit-taking could be underway.

The Layer 1 token has been on a roll lately, surging by nearly 370% over the past week. ZIL entered a parabolic rally last week when the project announced a partnership with Agora for its Metaverse as a Service platform, Metapolis.

ZIL was trading at a low of $0.047 and went on to hit a high of $0.22. Given the magnitude of the breakout, several technical indicators suggest that the token is now sitting in overbought territory.

The Tom DeMark Sequential indicator has presented a sell signal on Zilliqa’s four-hour chart. The bearish formation developed as a green nine candlestick, which is indicative of a one to four candlesticks correction. A spike in selling pressure could validate the pessimistic outlook, pushing ZIL to $0.155 or even $0.13.

Moreover, a bearish divergence between Zilliqa’s price and the Relative Strength Index has formed on the four-hour chart. While ZIL has been making a series of higher highs, the RSI has been trending downwards. Such market behavior is indicative of waning bullish momentum.

Zilliqa US price chart
Source: TradingView

Despite the mounting sell signals building on Zilliqa’s four-hour chart, traders will be looking out for another bullish breakout. A decisive candlestick close above the recent high at $0.22 could have the strength to invalidate the short-term pessimistic outlook and lead to further gains. Breaching the critical resistance area could push ZIL toward $0.28 or higher.

Disclosure: At the time of writing, the author of this piece owned BTC and ETH.

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