Arbitrum weakens – Should you short it?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• ARB’s lower and higher timeframe charts were bearish at press time.
• Open Interest rates improved slightly over the weekend.

Like the rest of the altcoin market, Arbitrum [ARB] has made losses in the second half of August. The downtrend cracked the $1 psychological level. The lower and higher timeframe market structures were flipped to a bearish bias. At press time, a shorting opportunity with modest gains was likely. 

How much are 1,10,100 ARBs worth today? 

Will the recovery falter and favor sellers?

Source: ARB/USDT on TradingView

A Fibonacci retracement tool (yellow) was plotted between the August high and low. The 23.6% Fib level of $0.982 was a crucial support but was flipped to resistance. At the time of writing, price action edged higher towards the resistance level. 

With a weak BTC, a price rejection at the 23.6% Fib level could present a shorting opportunity with modest gains. The take-profit could be set at $0.921 and the entry position at $0.982.

A candlestick session close above $1.0 will invalidate the above short set-up. Such an upswing could tip ARB to target $1.02 and $1.06. 

Meanwhile, the Relative Strength Index (RSI) remained below 50 in the second half of August, denoting muted buying pressure. At press time, it approached the 50-mark and likely rejection could signal a price reversal. 

The Chaikin Money Flow (CMF) was below the threshold, confirming capital outflows and cementing a likely short-play thesis. 

Open Interest rates improved slightly

Source: Coinglass

Since Friday, 25 August, the Open Interest (OI) rates slightly improved. It jumped from $103 million on Friday to around $111 million on 27 August. The uptick demonstrates improved demand for ARB in the derivative markets over the weekend. 

Is your portfolio green? Check out the ARB Profit Calculator 

However, more short positions have been wrecked in the last 24 hours before the time of writing, as per Coinglass’s liquidation data. So, tracking Bitcoin [BTC] price movement is crucial before shorting the altcoin.