Wormhole crypto’s latest price rejection – Result of a short squeeze or an organic rally?
The Ripple partnership announcement boosted demand for W, but would this be sustainable?
- Wormhole established a bullish structure on the 1-day chart
- The $0.07 demand zone must be defended for traders to maintain their bullish outlook
In an announcement on Tuesday, leading U.S crypto exchange Coinbase confirmed that it will list Wormhole [W] as an SPL token on the Solana [SOL] network. Listing on such a reputable exchange with a high trading volume can give a relatively lightweight $333 million market cap token, such as W, short-term bullish impetus, but not much more.
A week ago, Wormhole entered into a strategic partnership with Ripple. The aim is to integrate multi-chain interoperability with the XRP Ledger and its EVM-compatible sidechain. This development, announced on 26 June, saw a 12% price rally for the day. And yet, the longer-term trend did not quite shift bullishly.
In fact, data from IntoTheBlock showed that 89% of the holders were out of the money. This was worrisome news because any attempted price recovery would be met by profit-taking activity or holders trying to exit at break-even. It could be hard for the bulls to build up momentum against these persistent sellers.
Wormhole structure break or liquidity hunt?
On 28 June, the price of W briefly climbed past the $0.08-level. This resistance (orange) had been the previous local high, made in June. After this candlewick broke beyond the resistance, W fell lower to fill the fair value gap (white box) at the $0.07-region.
The volume indicators suggested that the market structure break was real, and not a liquidity hunt. The CMF was at +0.09, and the reading above +0.05 reflected sizeable capital inflows to the Wormhole market. The OBV has also trended higher over the past ten days. To back up the bullish notion, the MFI climbed above 50 and rose to 64 – A sign of greater buying pressure and upward momentum.
Hence, traders can use the retracement of the past four days to buy more Wormhole tokens. A move below the $0.068-level would mean the breakout has failed. Swing traders can use the $0.065-$0.068 area to set their stop-losses, targeting the $0.08 and $0.091 resistances to take profits at.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
