Lisk’s announcement today of the launch of their first sidechain ICO, Madana has come at a critical time for the project.
LSK just touched back down on its base support again for the fifth time in the past 12 months, finally finding some stability after suffering a steep three-month-long decline. This base support region has a noticeable history for providing strong trend reversals in the past, so will this new sidechain ICO announcement provide the catalyst for LSK to begin the long ascent back towards its earlier price points?
The Story So Far
Diving into the LSK/BTC chart over 1D candles we can see a very clear pattern of ‘pump and dumps’ occurring along the red base support region between the 47,300 and 58,200 Sats levels. Whenever LSK in the past has returned to this zone after tumbling for an extended period, it is quickly followed by a surging bull run which hits a peak and then falls back down again.
So what signals can we see that suggest this might happen again? Well, our first indication comes from the RSI, which is highlighting the asset as oversold. This is further supplemented by similar characteristics on the MACD and Williams R% indicators.
When an asset is oversold, we usually expect it to recover back into the index channel as bearish selling pressure decreases and the market rebalances. LSK, however, has been oversold for a short while now and this is largely due to its extremely thin trading volume that has been decreasing dramatically over the last three months. Dwindling volume tells us that market demand for an asset is low and gives us some explanation as to why LSK has been struggling to recover from its oversold state.
Over 2hr candles, we can see that the price action is now testing the base support for a second time but is showing significant improvements in buying pressure on the CMF indicator. After pulling away from the base support on the first attempt, the CMF was able to climb over the signal line which is a fairly good indicator of increased buying pressure.
On the Ichimoku indicator the resisting red Kumo cloud is now close within converging distance of the recovering price action; if the candles can climb through this cloud, then we will have a good confirmation of a bullish reversal. For now, though, we still have a bearish T/K crossing.
We still have a number of bearish indicators, however, that are looming over this asset which prevents us from expecting a reversal any time soon.
The 50 EMA (blue) is still well below the neighbouring 200 EMA (red), even over a closer 30-minute candle range.
MACD is also still hovering below the signal line and showing little bullish movement back up.
Lisk (LSK) Price Targets
All price targets are set from the 58,200 Sats base support, where LSK is currently retracing to.
Price Target 1: Looking at the bearish indicators we are seeing right now I think we can expect the current overall downtrend to continue towards the lower support of this red region at 47,300 Sats (-18.73% loss).
Price Target 2: Once Lisk hits this price point I think it will become very appealing to investors who will want to enter into LSK at this very cheap price. Once the bull run begins I think FOMO buying will spark off a strong uptrend back towards the higher resistance areas, with the first bullish target at the 80,000 Sats mark (37.46% ROI).
Price Target 3: From here I think the news will continue to spread that Lisk is reversing and will draw in further investment, which will make the next target at 90,400 Sats a realistic area going forward (55.86% ROI overall).
This article appeared first on Cryptovest
