Conflux [CFX] breaks out of trendline resistance, but could it be a bull trap
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The market structure remained bearish despite the lower timeframe breakout.
- A reaction at the $0.4 mark could signal the direction of the next move for Conflux.
The price of Conflux reached a five-month high after the buyers pushed prices to $0.487 last Sunday. Since then, CFX was forced to retrace a portion of the gains it made since mid-March. It went on to break out of a lower timeframe trendline resistance.
Read Conflux’s [CFX] Price Prediction 2023-24
This did not mean that the bulls had won the fight to initiate an uptrend. Instead, it suggested that some volatility could arise soon and the resistance zone overhead could be critical in setting the direction of CFX for the coming week.
The zone of resistance at $0.38 might halt the trendline breakoutThe descending trendline resistance was highlighted in blue. Conflux broke past it in recent hours but its market structure remained bearish, as it has not yet beaten the recent lower high at $0.4. The $0.366-$0.391 region was highlighted in red on the chart to show that it was a strong zone of support for CFX two weeks ago.
Since then, it has flipped to resistance. Therefore, a move into this zone will likely see rejection as the bears will likely be strong. The OBV has been flat over the past week, and a noticeable move upward or downward will indicate that bulls or bears respectively were beginning to seize the upper hand.
The RSI was at 49.9, which showed neutral momentum. The previous bearishness can flip toward the bullish side, according to the RSI. However, the market structure and the $0.38 resistance zone were contextually important.
Is your portfolio green? Check the Conflux Profit Calculator
More aggressive traders can look to short CFX around the $0.38-$0.4 area, targeting a move down to $0.3. Invalidation would be a session close above $0.4. Risk-averse traders can wait for more confluence from Bitcoin setting its Monday high and low and evaluating CFX over the next 48 hours.
The funding rate showed sentiment might remain bearishSince 25 March, the Open Interest has begun to climb higher alongside the prices. However, the advance of the OI was at a snail’s pace and not as sharp as earlier this month, when CFX saw more volatility and registered strong gains.
This suggested that bullish sentiment was present but lukewarm. Well, it was countered by the steadily declining spot CVD, which indicated selling pressure did not yet let up. Moreover, the funding rate was also negative, which underlined bearish sentiment once again.