Algorand (ALGO) has recently gained significant momentum, breaking through its falling wedge pattern and surpassing a crucial resistance level at $0.24. This breakout has ignited bullish sentiment, with technical indicators suggesting the potential for further upside. However, the next few price movements will be crucial in determining whether this rally can be sustained or if the token will face a reversal.

Price Action and Breakout

The breakout above the $0.24 level on the 4-hour chart has caught the attention of traders and investors. Algorand had been consolidating within a falling wedge pattern for several weeks, and this breakout signals a potential trend reversal. Falling wedge patterns are typically considered bullish, as they indicate a shift in market sentiment from a downtrend to an uptrend.

At the time of writing, ALGO has surged by 5.4%, bringing its price to $0.250. The surge in trading volume, which saw an 18.61% increase, suggests that there is substantial buying pressure, further confirming the bullish sentiment surrounding the asset. If this price action continues, ALGO could target the $0.32 resistance level in the short term. A further break above this level may open the door for a potential rise toward the $0.40 resistance zone.

Technical Indicators

Looking at technical indicators, Algorand’s Relative Strength Index (RSI) currently stands at 59. The RSI is not yet in overbought territory, meaning there is still room for price appreciation before the asset becomes overextended. The short-term and long-term Simple Moving Averages (SMAs) also suggest a “buy” signal, which aligns with the bullish price action on the chart.

Despite these positive indicators, the Moving Average Convergence Divergence (MACD) stands at -0.0213, which indicates that the bullish momentum is still in its early stages. The MACD is not yet fully positive, suggesting that the price uptrend is unconfirmed. Additionally, the Exponential Moving Average (EMA) and mid-term SMA are signaling a “sell,” which raises concerns about the sustainability of the rally.

On-Chain Metrics

The on-chain data offers mixed signals. According to IntoTheBlock, 78% of large ALGO holders are currently out of the money after holding their tokens for more than a year. This suggests that a significant portion of investors may be holding onto their tokens at a loss, potentially putting downward pressure on the price if they decide to sell. Despite this, the recent surge in large transactions—reaching $72.07 million over the past week—signals that whales are still actively participating in the market.

Moreover, the 24-hour long-short ratio has risen to 2.19, indicating that more investors are buying than selling. This is a positive sign for the overall market sentiment. However, Algorand has experienced fluctuations in its Total Value Locked (TVL), which has declined in Q1 2025, according to data from DefiLlama. This decline in TVL may indicate reduced activity in decentralized finance (DeFi) protocols on the Algorand network, which could influence ALGO’s long-term prospects.

Key Levels to Watch

For the bullish momentum to continue, Algorand must maintain its position above the $0.24 support level. A failure to do so could result in a retest of the $0.22 support, with further downside risks toward $0.17. On the other hand, if ALGO can sustain its current uptrend and break above the $0.32 resistance, it could target the $0.40 level in the coming weeks.

In conclusion, Algorand has shown strong potential for growth following its breakout from the falling wedge pattern. However, technical indicators and on-chain metrics suggest that caution is still warranted. Traders should monitor key levels and be prepared for potential volatility as ALGO attempts to confirm its next move.