Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Over the past week and a half, Binance Coin has had a mixed session of trade. While an ascending triangle breakout did push the price to a 3-day high of $439.5, gains were short-lived due to profit-taking. A resulting bearish channel also triggered a breakdown as BNB revisited lows seen on 8 September.
Since then, BNB has made somewhat of a comeback on the charts. A double bottom pattern kickstarted a rally as BNB closed above the 38.2% Fibonacci level. However, some sideways movement can be expected as volatility soon took a back seat.
At the time of writing, BNB was valued at $428.4, up by 1.1% over the last 24 hours.
Binance Coin Hourly Chart
Source: BNB/USD, TradingView
Even though BNB has had its ups and downs, the price has remained below the 50% Fibonacci level since the 7 September flash crash. As buyers prepare to challenge this ceiling, it is important for BNB to hold above the 38.2% Fibonacci level.
If a breakdown is triggered, bears would initiate drawdowns between the 23.6% Fib mark and $380-support. A severe bearish outcome could even see BNB drop as low as $364.
Reasoning
BNB’s hourly Bollinger Bands were constricted due to low market volatility. In such cases, sideways movement becomes quite common as the market remains in equilibrium between buyers and sellers. Incidentally, the lower band coincided with the 38.2% Fib mark and a breach below this area would invite short-sellers to the market.
The lack of a clear trend was also visible on the Directional Movement Index as the -DI was gridlocked with the +DI. Meanwhile, the RSI eased from overbought conditions and steadied around the mid-line. This was a sign that there was some pressure to keep the price above $424 in the next few hours.
Conclusion
Once volatility picks up, BNB can be expected to challenge the 50% Fibonacci area and claw back some lost ground. In order to achieve this outcome, buyers need to sustain BNB above the 38.2% Fib level.
Failing to do so would drag BNB to fresher lows below the $400-mark.
