ZIL’s price rally has made the coin “overbought” on multiple timeframes, raising selloff risks.
Zilliqa (ZIL) continues its supersonic bull run this week after reports that it will officially launch a so-called metaverse-as-a-service (MaaS) platform in April.
ZIL rallied nearly 25% in one day to $0.22 a token by Wednesday, its best level since May 13, 2021.
Its strong move came as a part of a rebound rally that started March 26 when it was trading for as low as $0.047. As a result, its net gains in the past six days came out to be more than 350%.
ZIL/USD daily price chart. Source: TradingView
Traders started flocking to the Zilliqa market a day after it announced the launch of Metapolis, a MaaS platform built on Nvidia Omniverse, during a VIP event coming April 2 in Miami.
The metaverse concept and the companies trying to build it attracted nearly $3 billion in funding in 2021 compared to $2.33 billion in the year before that, according to data intelligence firm Dealroom.
Investments into Metaverse startups in the recent years. Source: Dealroom
Notably, metaverse developers have been building everything from virtual events to host fashion shows to all-and-all marketplaces that sell physical goods in the real world, as well as digital ones accompanied by nonfungible tokens (NFT). In November 2021, Facebook’s parent company also changed its name to Meta Platforms Inc. to show its new focus on applications in a virtual universe.
Zilliqa shared its plans to tap the booming sector via Metapolis, revealing that it had already “amassed $2 million in pre-launch revenues from its client pipeline,” including Agora, a digital art platform that would host a virtual award event on the Zilliqa metaverse.
ZIL, which serves as a utility token inside the Zilliqa ecosystem to execute smart contracts and cover transaction fees, appears to be benefiting from the metaverse hype. Nonetheless, from a technical perspective, the coin has rallied too much, too quickly to sustain its profits near the local highs.
ZIL selloff ahead?
Zilliqa has become an “overbought” asset on both its daily and weekly period charts, according to its relative strength index (RSI) readings above the threshold of 70, as of March 31.
ZIL/USD weekly price chart. Source: TradingView
ZIL experienced a selloff upon nearing its interim resistance level of $0.235, also the 1.0 Fib line of the Fibonacci retracement graph — drawn from $0.235-swing high to the $0.037-swing low.
As such, the ZIL/USD pair dropped by over 12% to test the 0.786 Fib line near $0.193 as interim support, and eyed further downside momentum with its RSI still above ’70.’
Holy Crypto…. $ZIL
90 RSI and at resistance, if you own this, probably not a bad time to take profit pic.twitter.com/slyUrEsG1C
Meanwhile, ZIL appeared to have been trading inside a giant symmetrical triangle since August 2020, confirmed by at least two reactive highs on its upper falling trendline and two reactive lows on its lower rising trendline.
ZIL/USD weekly price chart featuring symmetrical triangle. Source: TradingView
On March 31, the Zilliqa token retested the triangle’s upper trendline (around $0.19) for a potential pullback move toward the lower trendline (below $0.08). That amounts to at least a 55% price drop in the coming weekly sessions if the pattern pans out as expected.
Conversely, a decisive break above the resistance confluence, including the triangle’s upper trendline and two Fibonacci levels, could have ZIL eye $0.35 next, coinciding with the 1.618 Fib line.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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