Arbitrum ripe for long entry, but there’s a risk
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- ARB has hit a demand zone of interest to bulls.
- Holders tighten hold on their recent accumulations.
The crypto market has been choppy in the past few days, and short-sellers exploited it to their vantage. Arbitrum [ARB] was a seller’s paradise over the same period. The layer-2 token’s price rejection at May highs around $1.35 saw the price drop to a critical demand zone and offered >10% gains to short-sellers in two weeks.
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In the meantime, Bitcoin [BTC] suddenly dropped from >$30k to below the previous range-low of $29.5k and could embolden bears for a while unless it reverses.
Will bulls defend the demand zone?
The Relative Strength Index retraced and was constricted below the neutral level of 50. It underscores the selling pressure in the past two weeks.
But the Chaikin Money Flow bounced from the negative territory and fluctuated around zero, denoting stagnated capital inflows. Collectively, the indicators reinforce limited buying pressure and demand.
Nevertheless, ARB hit a key confluence area of $1.06 – $1.12 (cyan), which could bolster bulls. The area is a bullish order block (OB) on the 12-hour chart and aligns with a critical support level in May, June and July. It could be a solid bullish zone for a long entry position, targeting the May high and bearish OB near $1.35.
But the weak BTC could spoil the party for Arbitrum bulls, hence worth tracking before making moves. The $1.0 support will be the next support to watch if the confluence and bullish zone described above cracks.
Steady accumulation in Q3
Q3 2023 saw steady accumulation, as illustrated by the rising 90-day Mean Coin Age. The rising Mean Coin Age with little or no drops indicates that investors are holding onto their tokens – a bullish cue.
How much are 1,10,100 ARBs worth today?
Similarly, the development activity has been positively correlated with the price. But a recent spike in development activity in early August was yet to see a price reversal.
Besides, as the spike in active addresses demonstrated, the rising user activity was yet to bolster a bullish reversal. So, the demand zone could only hold if BTC doesn’t record more losses.