After a 273% rally, this key indicator signals that the CELO price was exaggerated

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Now that the altcoin season is just around the corner, several tokens are seeing illustrious price increases every day. In a sideways market is a trader’s ability to anticipate when an asset will break out – and when everything is green, knowing when the rallies will end is equally important.

This week, CELO launched a lightning rally that created an almost vertical line on its price chart but then quickly faded away without initiating a strong second wave.

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Besides keeping an eye on the candlestick charts, what better way for traders to know in advance when to get out?

A new DeFi initiative is driving CELO’s price increase

CELO is the native asset of the Celo blockchain ecosystem, the main goal of which is to bring the convenience of decentralized finance, or DeFi, to smartphone users around the world. As a utility token that uses a proof-of-stake consensus mechanism, CELO is intended to facilitate transactions and governance processes on the platform.

On Aug. 30, a consortium of DeFi companies – including Aave, SushiSwap, Curve, 0x, PoolTogether, and Celo – announced a joint education initiative aimed at raising global awareness of decentralized finance for which they receive grants and incentives Have pledged up to $ 100 million.

In terms of the immediate impact on crypto asset prices, CELO benefited the most from the news as the Celo platform will serve as the primary infrastructure for the initiative. The price of the coin spiked immediately, increasing about 170% over the next 24 hours.

Extraordinary price spikes like these often end in hard corrections. However, there is always hope for investors that an even stronger pump is just around the corner. In the case of CELO, however, the first high at $ 9 stayed the high-water mark, and the price of the coin only fell from there.

Anticipate a fall in prices

In addition to being one of the top winners of the week, CELO is also one of the few assets to have a low VORTECS ™ Score.

The VORTECS ™ Score is a machine learning algorithm that compares historical and current market conditions around digital assets in order to support the decision-making of crypto traders. Available exclusively to Cointelegraph Markets Pro subscribers, the indicator takes into account a variety of variables – including price movements, trading volumes, social sentiment, and market outlook – to provide a rating that assesses whether current conditions for a given coin are historically bullish, neutral or . are bearish.

High values ​​indicate the model’s confidence that the currently observed conditions are historically favorable; Lower values, which are less common, occur when the algorithm detects a pattern that has consistently preceded significant price declines.

CELO price vs. VORTECS ™ Score. Source: Cointelegraph Markets Pro

As can be seen in the graph above, CELO’s VORTECS ™ Score plunged into the red below 30 as the asset’s price momentarily rebounded from $ 7.03 to $ 7.24, from a high of $ 9 went downstairs. While this rally might look like the start of leg two of the rally, historical precedents suggested that conditions around the coin were bearish.

Traders can use this knowledge in a number of ways. Those who were hoping for another spike could be tricked into giving up those hopes and securing their gains above $ 7. Another strategy could be to short CELO and bet that the price would soon return to a downtrend.

On CELO, the asset soon stabilized in the $ 5.50 to $ 6 range, which was still significant growth from the $ 4.30 region from which it exploded during the initial rally.

Cointelegraph is a financial information publisher, not an investment advisor. We do not offer any personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent loss and total loss. Past performance is not an indication of future results. Illustrations and diagrams are correct at the time of preparation or as otherwise stated. Live-tested strategies are not recommendations. Consult your financial advisor before making any financial decisions.