- Waves lifts off inverse head-and-shoulders pattern amid mounting speculation.
- A daily close above $40 will likely trigger massive gains toward $50.
Waves leads cryptocurrency price action among other selected altcoins such as Dogecoin and Ethereum. In less than a couple of weeks, the token has recovered from $10.4 to historical highs around $42.
In the meantime, WAVES teeters at $38 after a correction from the all-time high bounced off support at $30. The prevailing technical picture will likely remain unchanged, bolstering WAVES above $40 and toward $50.
Waves Uptrend Emanates from this Crucial Technical Pattern
The four-hour chart brings to light an inverse head-and-shoulders (H&S) pattern, which usually forms following a significant move down. This pattern reveals the downtrend exhaustion and presents an opportunity to buy the dip in anticipation of a substantial upswing.
Following a second lower low (head) formation, strong support comes into the picture. The price begins to lift, nurturing an uptrend but resistance at the neckline delays the price action, explaining the pattern’s right shoulder. This is the point where an H&S pattern materializes but is only confirmed when the asset’s price strikes above the neckline resistance.
It is essential to wait for the breakout confirmation before going all-in on the asset. Usually, a close gives the go-ahead; for example, if the pattern formed on the four-hour chart, a four-hour close is required to make a profitable trade.
WAVES/USD four-hour chart
As for Waves, the pattern has already been validated, and its impact is on course. A daily close above $40 will ensure the uptrend is secured. Trading past the record high of $42 will likely spur speculation for gains eyeing $40.
The uptrend has also been reinforced by the Relative Strength Index (RSI). The trend strength indicator holds firmly in the overbought region and currently points north, revealing the intense bullish grip.
At the same time, we must realize that Waves is already overbought. Therefore, correction is possible and may come into play, especially if price action remains either under $40 or $42 for a longer time. On the downside, support is envisaged at $30 and $20, respectively.