CHZ is poised for a breakout but the market could take another plunge

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

Chiliz [CHZ] has a market cap of $1.4 billion and is ranked 37th on CoinMarketCap. The sports and entertainment token has made numerous partnerships in the past year.

Its visibility and the upcoming FIFA World Cup could see a surge in demand for CHZ. On the charts, a bullish bias seemed warranted based on technical analysis. Can Chiliz surge above the $0.24 zone of resistance that the bulls have grappled with for a month?

CHZ- 3-Day Chart

The three-day chart shows the asset in a strong downtrend. Indeed, Chiliz had not beaten its previous lower high from November to June. Slowly, this began to shift as demand began to arrive with force in July and August. In August, the price broke above the lower highs it set in May, and shifted the market structure to bullish.

A trendline resistance (yellow) from November was also broken in the recent past. At the time of writing, the $0.247 resistance level was the target for bulls to flip to support. If this can occur, another leg upward toward $0.33 could begin to brew.

One thing to note was that, even as CHZ pushed higher, the Relative Strength Index (RSI) could fail to make a higher high. This bearish divergence (orange) if confirmed could precede a significant pullback for CHZ.

Rationale

Source: CHZ/USDT on TradingView

The 12-hour chart showed that the demand has indeed been on the rise since late June. The On-Balance Volume (OBV) has made steady higher lows. At the time of writing, the RSI was also above the neutral 50 line to show strong bullish momentum. The past month has also seen strong trading volume, exhibited by the high volume bars. This showed bulls and bears skirmishing hard in the $0.16-$0.24 region.

The two highlighted cyan boxes have served as support and resistance belts over the past month. A long-term investor anticipating a bullish move on CHZ can look to buy a retest of both boxes, with a conservative stop-loss set below $0.167.

Conclusion

The World Cup kicks off in two months, and that could leave plenty of time for Chiliz to have a bullish run. Bitcoin has seen intense selling volume in recent weeks.

Its rejection at $24k in August, and $22.6k this month, meant the trend was firmly in favor of the bears. If this can reverse, Chiliz could surge as high as $0.43-$0.44 and possibly higher.