- Filecoin has a strong bullish bias on the daily chart.
- The possibility of a reversal and range formation was present.
Filecoin [FIL] saw a stellar performance in the past three weeks. It retested the higher timeframe support zone at the $4.6-$5.6 area and rallied 76% since the 5th of February to reach $8.57. It appeared likely that a move toward $9.5 is on the cards.
Yet, the dwindling buying pressure on the lower timeframes was concerning. Has Filecoin run out of steam? Here’s how traders could navigate the coming weeks.
The 100% extension level was tested once more
Source: FIL/USDT on TradingView
After the $3.5 support zone was retested in late October 2023, the price rallied to $5.66. This move was used to plot a set of Fibonacci retracement levels (pale yellow).
It showed that the 100% and 200% extension levels were at $7.81 and $9.96. Apart from that, the $6.2-$6.5 area was significant as well.
Additionally, on the weekly chart, the $4.6-$5.6 bearish order block was flipped to a bullish breaker and highlighted in cyan. As mentioned earlier, this area was also retested in early February before the massive rally ensued.
The OBV has trended strongly higher and indicated buyers were dominant. The RSI was at 76, highlighting the strength of the momentum on the daily chart. Taken together, it was likely that a move to $10 was imminent.
Yet, the zone above the $8 high from January is likely filled with sell orders. Holders from lower levels would likely be planning on booking profits. Therefore, a reversal from the $8-$8.5 zone was also a possibility that traders should be prepared for.
The past four days saw the bullish sentiment weaken
Source: Coinalyze
Since 20th February, the Open Interest has remained near the $300 million mark. It waxed and waned alongside the price but made no new highs. The inference was that capital flow into the futures market had begun to slow down.
How much are 1, 10, or 100 FIL worth today?
The spot CVD began to trend downward in the past four days, showing selling volume has increased in the short-term. Yet, the funding rate remained positive.
In the event FIL experiences selling pressure, $7 and the $6.2-$6.5 region are expected to serve as demand zones.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
