Throughout the crypto bear market, most coins were continuously pushing new lows month after month. Their relative strength to bitcoin, in particular, was massively devalued. However, one coin that really stands out in the face of this devaluation is Komodo (KMD).
In mid-July, KMD found its bottom around 16,000 satoshis (sats) and established a very strong support level that formed the lower boundary of a massive trading range:
Figure 1: KMD-BTC, Daily Candles, Stopping Action of the Downtrend
For the last seven months, KMD was bound by a well-defined upper and lower boundary that formed an accumulation trading range.
Figure 2: KMD-BTC, Daily Candles, Accumulation Trading Range
Without going into the minutia of the Wyckoff Theory, we can generally assume that a market is under strong control when it is confined within a well-defined range. The purpose of a trading range is to either distribute an asset to investors or trick investors into selling their assets into a larger, stronger entity. When we see a well-defined range like the one shown in Figure 1 and Figure 2, we see a clear trend of swing highs and swing lows that outline points of interest to the larger, stronger entities and we can see a clear boundary where the entities are no longer willing to buy above or sell below a given value. And when we take into account the trend of volume, we can start to make assumptions about the intent of the entity’s trading range.
A breakout of the trading range typically corresponds to a change of the price and volume trend. In our case, we not only see high volume that is well above the average level of trade volume. Coupled with this volume we can see high price spread that indicates an overwhelming amount of demand and lack of supply:
Figure 3: KMD-BTC, Daily Candles, Trading Range Breakout
This high volume and wide spread also corresponded with a new close above the trading range for the first time since July 2018. Additionally, this breakout led to a test of strong, macro resistance level that is looming overhead. So far, the first whack at the resistance level was unsuccessful:
Figure 4: KMD-BTC, Daily Candles, Macro Resistance Test
Although this market looks incredibly bullish and ripe for a continuation of the uptrend, it’s important to remember that the bitcoin pair does not always correspond to an increase in total value. This is a reflection of the coin’s relative strength to the bitcoin market. If the bitcoin market pulls back in USD value, we could still see KMD pull back relative to the dollar while still pushing upward or holding support on the KMD-BTC pair. However, this KMD breakout is a very bullish signal and has the potential to have a massive markup campaign, given how long and strong the accumulation phase was for this coin.