The Curve DAO token has been on a downtrend since August. Its latest breakdown below the $0.37 level was expected to yield a drop to the next long-term support at $0.243.
Instead, CRV only dropped to $0.331 before bouncing to $0.385.
This bounce was a 16% move in just over 4 days. Could it be the start of a bullish reversal?
Understanding the bounce and the potential of a CRV uptrend
In an earlier AMBCrypto report, the altcoin was assessed to be in a bearish trend. The 16% price bounce was unexpected, and it also filled an imbalance on the 6-hour chart pointed out earlier.
The capitulation narrative and whale selling were not enough to prevent this bounce, but the longer-term trend remained intact.
The long-term trend remains bearish. The OBV has hardly stirred, and one day of buying can not reverse months of a downtrend. The moving averages reinforced the price action, capturing the downtrend’s prevalence.
The horizontal resistance at $0.372 has been retested as resistance. This was the result of the bounce. More downside remains likely for CRV.
Charting the less likely scenario ahead
The 1-hour chart showed that the recent bounce went just above the H6 timeframe’s imbalance (white box) and briefly flipped the $0.372 level to support. In the past few hours of trading, this support has been lost to the bears.
Therefore, the less likely scenario was that the Curve DAO token would rally higher and push toward $0.4 and higher.
Traders’ call to action — Bearish despite the swift bounce
The move to fill out the imbalance and test the lower timeframe swing point at $0.384 could have been a liquidity grab.
While the short-term volatility could have shaken out short positions, the bias of swing traders would have to remain bearish.
It is possible that CRV would proceed to trend lower and fall back below the $0.33 level, which is a short-term Fibonacci extension level.
Final Thoughts
- The 16% CRV bounce within the past five days seemed to argue that bulls had found their footing and begun a recovery on the price charts.
- Zooming out to examine the longer-term trend, it became clear that the bearish trend was prevalent despite the recent bounce, and swing traders need not shift biases bullishly.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion