ZRX exploded higher on Friday, breaking above the $1 level and more than doubling to over $2 before pulling back a bit, finishing the day with an enormous breakout higher. This is obviously a bullish candle as ZRX has finally started to break out of the doldrums of sub-$1 levels for the first time since the early 2018 alt season.
(February 6, 2021 7:30PM EST)
Outlook:
ZRX lifted off on Friday, officially confirming the bullish breakout higher and surging to over $2 intraday before getting a little overheated and pulling back to the mid-$1s. This is undoubtedly a bullish chart and development for ZRX as it's clearly breaking out of a long-term downtrend and sideways trading range, however blowoff tops like these cannot last, of course. From here, and we're already starting to see it, ZRX should retrace a decent portion of this massive rally and slowly consolidate lower as it rebuilds momentum for its next leg up. Don't be mistaken, though: this is a good thing! We want to add to our stacks at a lower price, ideally around the corrective wave 2 bottom which will probably be around $1.16 or ideally just under $1 as shown in the chart above. After ZRX makes a 50-61.8% correction, I expect the buyers to step back in with force (if we even retrace that low - I know I'll be buying) to put in a higher low after this higher high and we can resume the breakout/uptrend to higher highs.
If you followed my ZRX fundamental analysis earlier last week, you'll know we have been very bullish on ZRX due to its underlying 0x protocol and the massive network adoption and superior technical functionality in a burgeoning DeFi space. ZRX should continue to be an excellent horse to bet on in the rise of DeFi, and we will look to capitalize on its further success.
Additionally, with crypto large-caps like BTC and ETH already having carved out their respective large pieces of the crypto market pie and already having made significant % moves over the last 6+ months, small-mid caps like ZRX with live mainnets and growing adoption should continue to see increased user inflows as more DEXs leverage 0x's superior capabilities and investors flock to the fastest and cheapest DEXs available (Matcha is powered by 0x, you know!).
Support: Look for immediate support at the 38.2% Fibonacci retracement level around $1.35 which ZRX has already bounced off of once. Below that, we'll look for support around the 50% fib around $1.16 and then ultimately the 61.8% fib at about $1.
Resistance: Look for resistance Immediate resistance at the $2 level, which was breached briefly during a manic blowoff top and then ZRX fell back beneath. Tomorrow I'll do a weekly analysis that'll look at longer-term price targets and resistance levels as ZRX continues to grind higher.
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