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Analysis

BONK rallies nearly 30%, but why the memecoin can turn bearish soon

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BONK saw a bounce from the mid-range level on the 13th of May to reach the two-month range highs.
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BONK rallies nearly 30%, but why the memecoin can turn bearish soon
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  • BONK witnessed strong bullish momentum but reduced buying pressure
  • Combined with the local resistance, the lack of demand could see a bearish reversal soon

Bonk [BONK] has a bullish outlook and managed to push toward the local resistance level once again. The BONK and Bitcoin [BTC] bulls had strong upward momentum, and further gains appeared likely.

Yet, BTC was at a local resistance level. BONK could reach a supply zone soon. A BONK technical analysis by AMBCrypto earlier this month predicting a 15% drop and a subsequent 30% rally proved right.

What could come next for the meme coin?

Will the rally halt after another 10% move higher?

BONK D1 TradingView

Source: BONK/USDT on TradingView

In the past two months, BONK has traded within a range (purple) that extended from $0.0000286 to $0.0000136. The mid-range mark (dotted white) at $0.0000212 has also served as a support level.

This formed a range within a range, and BONK saw a bounce from the mid-range level on the 13th of May. This came during the GME hype period, the token has performed well since then.

Despite the 28.6% gains in the past six days, the CMF showed a negative reading of -0.11. This indicated significant capital outflow from the market.

Hence, even though the RSI reflected bullish momentum with a reading of 61, it appeared that the selling pressure and the range high resistance could reject the meme token bulls.

The liquidation heatmap highlighted the same range

BONK Liquidation Heatmap

Source: Hyblock

The one-month look-back period of the liquidation heatmap highlighted what the technical analysis already laid out. The $0.00002 and $0.00003 levels have the highest concentration of liquidity levels nearby.

Realistic or not, here’s BONK’s market cap in BTC’s terms

Therefore, it is likely that we see a move to $0.00003-$0.0000315 to collect this liquidity before a bearish reversal.

To the south, the $0.0000186-$0.0000201 level could provide a stable demand zone.

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

 

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Akashnath Sumukar works as a Senior Journalist at AMBCrypto. Based in Chennai, India, he has been an avid follower of the cryptocurrency market since Bitcoin’s boom and bust cycle of 2017. A graduate in Chemical Engineering, he is an expert in technical analysis. In fact, Akashnath has a particular interest in reading price charts and predicting how an asset will move over the short and long term. A self-taught trader and as someone who holds cryptos himself, he is always on the lookout for the next opportunity he can possibly capitalize on, while also educating his audience.
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