Ziliqa (ZIL) has broken from its January 2021 lows but is trading in a bullish pattern and is showing signs of a potential bullish reversal.
The ZIL has been falling since hitting a record price of $0.257 on May 6. The downward move led to a low of $0.033 on Feb 24. This represented an 86% drop from the all-time high price mentioned above.
Although there are three more days until the weekly close, it would take a significant price increase for the support line to remain intact.
ZIL trades in bullish pattern
Despite the continued decline, the daily chart shows that the ZIL has been trading inside a descending wedge since September 2021. The wedge is considered a bullish pattern. Therefore, an escape from him would be the most likely scenario.
The breakout is supported by significant bullish divergences on the RSI and MACD.
In the case of the RSI, this came after the indicator jumped from its lowest levels since 2019 on January 24 (green icon). Such pronounced bullish divergences often precede a trend reversal.
If a breakout occurs, the closest resistance area would be at $0.086. This is the 0.5 Fib retracement resistance level and a horizontal resistance area.
Wave count analysis
Cryptocurrency Trader @Thetradinghubb tweeted a ZIL chart, stating that the correction could be made near $0.03.
The most likely wave count suggests that ZIL is on the C wave of an ABC (white) corrective structure. The sub-wave count is given in black.
So far, the A:C waves have had a ratio of 1:0.5, and the latter has developed into a final diagonal. These patterns are usually followed by a significant move in the other direction.
When combined with bullish divergences, this indicates that an eventual breakout from the wedge is likely.
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