- If you’re thinking of going alt coin shopping, make sure you check the key support levels
- Some alt coins might seem to have rest but traps still lurk out there
- How can you tell if an alt coin has fully reset?
When looking around for alt coins at the end of a market cycle, it’s important to check that they have bottomed out. Think of it like the hero making absolutely sure the poison gas has disappeared before he takes his mask off – you don’t want any nasty surprises. So how can you tell whether your chosen alt coin has completed its cycle or if there’s more red on the way? Allow us to show you.
Alt Coin Resets Hold the Key
There is a typical pattern that alt coins take during a market cycle – a slow steady grind up followed by a parabolic run and then slow steady grind back down again. Given that these cycles typically repeat, at least with alt coins that are able to stand the test of time, it’s important to know when the time is right to step back in.
One of the key indicators is where the price is compared to before the parabolic rise. An alt coin does not have to completely retrace a move, but it needs to establish a strong base of support before we can be sure that it is ready for accumulation after a long period of distribution. Let’s use FRONT as an example:
We can see that FRONT enjoyed a parabolic run in early 2021 and has spent the next 12 months in a pattern of decline. We can also see that a resistance zone in late 2020 acted as support right before the parabolic run, with that same support offering a platform for the July 2021 bounce. When that bounce faded, price came back down to the same support level where it has remained for around two months and from where it is currently trying to escape.
This price action indicates a full reset following the parabolic and that this support area is where buyers continually step in, meaning it is a good spot to load up if you think its chances of a pump in 2022 are good.
We can compare this chart with that of the famous DOGE:
The difference between the DOGE and FRONT charts couldn’t be more stark. DOGE saw resistance at the $0.08 area in early 2021 before finally breaking through in April, with the price action since the blowoff top being strictly downwards.
The difference though is that DOGE has broken through all support zones on the way down, with the last one at $0.08 still waiting to be hit. While price may appear to be turning a corner right now, the fact is that it has still not had a full price reset and that $0.08 level is simply crying out to be tagged. Add to this that fact that its current level has no historical support whatsoever means that it is still not a tempting buy.
There are of course several factors you should consider before going into an alt coin after a parabolic cycle, but this is a good indicator of whether it truly has completed its cycle.