Key Takeaways
AI16Z started an upward movement almost immediately after its launch in October 2024. It picked up the pace to end the year and reached a new all-time high on Jan. 2, 2025.
The new year has not been as kind to the Artificial Intelligence (AI) agent cryptocurrency, which fell 50% after the high before bouncing this week.
While the bounce is substantial and has reclaimed an important support level, it is still unclear if it is the start of a bullish trend reversal or if it is just a corrective increase that will lead to a lower high.
Let’s examine the charts and see which is more likely.
AI16Z increased gradually alongside an ascending support trend line since November 2024. After bouncing at the trend line in December (white icon), the price increase accelerated, leading to a new all-time high of $2.51 on Jan. 2, 2025.
What has followed is a lengthy correction where the AI16Z price lost 50% of its value, culminating with a low of $0.74 which caused a breakdown below the ascending support trend line. Nevertheless, the price bounced this week and reclaimed the trend line.
If the upward movement continues, the 0.5-0.6.18 Fibonacci retracement area will provide resistance. The area often acts as the top if the increase is corrective, so the reaction once the AI16Z price gets there will be critical for the future trend.
Technical indicators support the recovery. Both the Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) have generated bullish divergences (green) before the bounce, legitimizing it.
The RSI has moved above 50, another sign associated with a bullish trend.
So, the six-hour time frame suggests that AI16Z will reach the $1.62-$1.83 resistance but is unclear if it will break out.
Similarly to the price action, the wave count suggests the bounce will continue. However, it also shows a five-wave decline (white) since the all-time high. This means that the underlying long-term trend is bearish and any bounces are simply relief rallies.
In that context, the ongoing AI16Z price increase is likely wave B in an A-B-C correction (black), that could end at the $1.62-$1.83 resistance region. Then, AI16Z could begin wave C, which takes it to new lows.
The long-term count (yellow) fits with this possibility since it shows a completed five-wave increase (yellow) starting in November 2024. If this is the case, the ongoing correction will retrace a portion of this entire upward movement.
Since the decline is a five-wave movement, EW rules dictate that the price will likely reach a top in the $1.62-$1.83 region.
So, a decisive breakout above this region will put this count at risk and instead suggest that new highs are likely.
AI16Z has stopped its correction with a considerable bounce off its lows, reclaiming a long-term diagonal support level. However, the upward movement may simply be a relief rally.
Even if that is the case, AI16z will likely continue increasing in the short-term. The reaction once the price gets to the $1.62-$1.83 region will be key in determining the future trend.