Kaspa (KAS) Price Poised to Rebound Despite Long-Term Pattern Breakdown

Key Takeaways

• The Kaspa (KAS) price has declined nearly 50% since its August all-time high.
• Kaspa broke down from a parallel channel and reached long-term support.
• Can KAS bounce at this horizontal support level, or is more downside likely?

Since September, Kaspa has created seven successive bearish weekly candlesticks, breaking down from a long-term corrective pattern. After the breakdown, KAS reached a long-term horizontal support area.

The KAS price has bounced in the past two weeks and created a short-term bullish pattern inside this support. How does this pattern fit into the long-term breakdown, and what are its implications for the short-term trend? Let’s find out.

Kaspa Reaches Support

The KAS price has fallen since reaching an all-time high price of $0.107 on Aug. 1. In October, the price reached a low of $0.100 before bouncing and creating a long lower wick (white icon). The bounce validated the $0.100 horizontal level as support. The support area has existed for nearly 330 days.

Despite the bounce, the price action is bearish since the KAS price also broke down from a long-term ascending parallel channel.

While the price action shows bearish signs, on-chain data is positive as Kaspa approaches its third birthday  on Nov. 8. Kaspa reached its higher-ever hash rate at 1.41 exa hashes (EH), showing that mining interest  is growing despite the negative price action.

In fact, the Kaspa price and hash rate have moved in different directions  in the past three months, exhibiting clear undervaluation.

Nevertheless, technical indicators  support the possibility of more downside.

The Relative Strength Index (RSI) is falling below 50, a sign associated with a bearish trend. Similarly, the Moving Average Convergence/Divergence (MACD) trends downward and below 0, both signs of a bearish trend.

As a result, the weekly time frame indicates that the long-term trend is bearish. If a breakdown happens, the next horizontal support area will be $0.050.

Let’s look at a lower time frame and see if a bounce is likely beforehand.

Can Kaspa Bounce?

While the weekly time frame is bearish, the daily one gives mixed readings. The chart shows that KAS has fallen inside an A-B-C corrective structure since the August all-time high. The entire KAS movement is contained inside a descending parallel channel and waves A:C have the same length. This suggests the correction is complete.

The multiple KAS price bounces (white icons) at the channel’s support trend line also confirm its slope, making an upward movement more likely.

However, technical indicators are still bearish. Even though the MACD and RSI have eased the pace of their decline, they still trend downward and are in bearish territory. Additionally, neither has generated a bearish divergence, which is expected at the end of corrections.

Finally, the six-hour chart provides some clear bullish signs.

Since it’s Oct. 25 low, which created a long lower wick, KAS has created an inverse head-and-shoulders pattern, which is considered a bullish pattern. This pattern is combined with a bullish divergence in the six-hour RSI, making a breakout more likely.

If one occurs, KAS can reach the minor resistance at $0.135. Projecting the pattern’s height to its breakout level gives the same target.

However, because of the bearish long-term readings, this would likely be a relief rally that eventually leads to new lows. The long-term trend is considered bearish until KAS reclaims the long-term parallel channel.

Mixed Readings

The long and short-term Kaspa charts are at odds, failing to predict a decisive KAS price.

While the long-term readings are bearish, the short-term chart suggests a breakout is likely.

Because of the bearish long-term outlook, this breakout may be a relief rally before the downward trend resumes.

About the Author

Valdrin Tahiri

Valdrin discovered cryptocurrencies while getting his MSc in Financial Markets from the Barcelona School of Economics in 2017. He has been an avid investor and trader since. Valdrin has written for several cryptocurrency media companies such as BeInCrypto and CoinGape.

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