Tezos Post-Blowoff: Trading the Retracement After Parabolic Exhaustion

Detailed Technical Analysis for Tezos (XTZ) as of July 23, 2025

1. Trend Analysis

• Long-term Trend: From late April to mid-July, XTZ traded within a broad $0.50–$0.67 range before breaking out sharply higher on July 18–20, peaking above $1.20 before quickly retracing. This signifies a major breakout followed by a rapid correction—a classic sign of a parabolic run ending in distribution.
• Short-term Trend: After touching $1.20, XTZ reversed and quickly fell, with current prices around $0.89 and low closing prices for the most recent candle. The break below $0.97 (prior local support) and the current close near the $0.88–$0.90 zone signals short-term bearishness and possible continuation downward.

2. Price Structure and Chart Patterns

• Volume Spike: The parabolic move upward to $1.13–$1.21 coincided with massive volume ($750M–$1B+), suggesting a buying climax. This is often followed by distribution and then mean reversion.
• Bearish Engulfing/Distribution: The daily chart post-peak shows large red candles, heavy wicks on top (sign of rejection), and closes near lows, confirming a strong reversal and trend exhaustion at the top.
• Support and Resistance:
  • Immediate resistance: $0.97–$1.00 (prior local support, now resistance)
  • Immediate support: $0.87 (current price also tested in last 1h), followed by $0.82–$0.80

3. Momentum Indicators

• RSI (Relative Strength Index): Though not numerically provided, the price's parabolic surge followed by sharp decline typically means RSI was overbought and is now rapidly unwinding, possibly even heading toward oversold on short timeframes, but without major bullish divergence.
• MACD: Given the momentum burst and reversal, the MACD histogram would have peaked and is now sharply declining, likely with a fresh bearish crossover and downward momentum.

4. Moving Averages

• Short-term (EMA20/EMA50): The break above $1 was well above the likely EMA20/50; but price has crashed back underneath, suggesting loss of momentum and entry into corrective phase. Crosses are almost guaranteed to flip bearish in 4-hour and possibly daily charts within a day.
• 200DMA: Given the long consolidation before, most longer-term averages are below, giving structural support near $0.72–$0.80; but immediate risk is further mean reversion.

5. Volume Analysis

• Climax and Fade: Giant volume on parabolic up-move, followed by substantially lower volume on the sell-off until the recent hour, where volume ticks up again on red candles—this is classic for the start of a new downward impulse.

6. Order Book Behavior and Market Psychology

• After massive euphoria, late bulls are now trapped above $1. The quick fade and lack of immediate bounce means capitulation from new buyers could continue. Buyers at $0.85–$0.87 are stepping in, but absorption is tepid and each attempt to rally is sold into.

7. Volatility and ATR (Average True Range)

• Recent ATR spiked with >30% daily swings; currently, ATR remains elevated. This creates potential for sharp swings and stop-run liquidity grabs either way, but overall market is imbalanced in favor of sellers as price remains under $0.96 and gets rejected on every bounce.

8. Fibonacci Retracement from Recent Swing Low to High

• Swing low: $0.54 (late June)
• Swing high: $1.21 (July 20)
• Key retracement levels:
  • 38.2%: ~$0.90 (just broken, now acting as resistance)
  • 50%: ~$0.88 (current)
  • 61.8%: ~$0.80 (next major support—target for downward move)

9. Elliott Wave Perspective

• Impulsive 5th wave completed with the $1.21 spike. Wave A correction is probably not finished. Subwaves suggest a three-leg correction to the 61.8%–78.6% Fib zone ($0.80–$0.72) is in play.

10. Candlestick Analysis and Intraday Structure

• Hourly candles: Attempted to hold $0.95–$0.97, rejected repeatedly, cascading lower to $0.88 with unsuccessful bounces.
• Selling into any strength: The few green candles on hourly are low in volume, implying short-covering rather than new buying.

11. Support/Resistance Mapping & Optimal Entry/Exit

• The $0.88 area is being tested; if lost decisively, the next magnet is $0.80–$0.82, near the 61.8% retracement and several historical pivots.

12. Risk Analysis

• Stop-loss: Strong short squeeze only if reclaimed over $0.97 (hourly close)—this is where a short thesis fails in the immediate term.
• Reward/Risk: Selling here ($0.89), stop $0.97, target $0.80 offers a ~10% downside with 9% risk (1:1 RR) but with growing bearish momentum, probability favors the trade.

13. Sentiment and Market Context

• Broader market: If Bitcoin or general crypto is experiencing a post-euphoria pullback, XTZ will likely underperform on the downside due to thin liquidity after blow-off. No evidence of decoupling so the move likely extends lower for at least another session.

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Conclusion & Recommendation

• The confluence of technical breakdown (trend reversal, failed bounces, resistance at $0.97), classic post-blow-off volume/structure, and bearish momentum indicators all point to more downside, with a high probability of a retest of the critical $0.80–0.82 zone in the next 24 hours.
• Trade Bias: SELL (Short Position)
• Entry: $0.89 (current)
• Profit Target: $0.80 (next major support, 61.8% retrace, high-volume node)
• Invalidation/Stop: Hourly close back above $0.97

Summary: Initiate a short here at $0.89, targeting $0.80 for cover. Downward momentum likely persists as trapped late buyers capitulate and sellers control the tape. Only reconsider if price reclaims and holds above $0.97.