FIL bulls see massive surge in prices but can the rally extend even higher?

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

• Filecoin saw a wild pump of close to 20% over the past few hours
• Buyers from lower levels can look to cash in their profits

Filecoin [FIL] has been in a downtrend on the daily timeframe since mid-April. But the past 24 hours have been interesting for certain altcoin bulls. FIL was among them as it surged 18% in the early hours of 3 July.

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Read Filecoin’s [FIL] Price Prediction 2023-24

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The lower timeframe structure and trend were bullish but the $5 level presented a zone of resistance that might be hard for the bulls to breach on their first go. Here’s where cautious bulls can look to book their profits, and also where the next rally could begin from.

The retracement after the market structure break gave a buying opportunity over the weekend

Generally, weekends see muted price action, although some weekends can see extraordinary volatility. The last weekend was a quiet one for FIL. The price flipped the market structure to bullish on Friday, 30 June. Hours later there was a wicked downward candle wick that touched $3.56 before rebounding to reach $4.25 on July 1.

The On-Balance Volume (OBV) took a hit during this downward move, but the events since then have shown that buying volume was far greater than the selling pressure. The Relative Strength Index (RSI) entered the overbought territory, although this does not signal a reversal was imminent by itself.

A set of Fibonacci retracement levels were plotted based on the volatility seen on 30 June and 1 July. It showed the 50% retracement level was at $3.91 and was almost tested on 2 July. FIL dipped as low as $3.935 but began to climb higher.

Bulls can wait for a move downward before looking for buy opportunities. A drop beneath the $4.26 level would be a sign of bearish dominance, but a retest of the $4.38-$4.52 level and a bounce could offer a buying opportunity on the lower timeframes. Meanwhile, traders already in a long position can look to book profits at the $4.7 mark itself, while more ambitious bulls can wait for a foray into the $4.95-$5 region.

The swift downturn in the spot CVD suggested FIL sellers could be preparing to reverse the rally

The H4 price chart indicators were firmly on the side of the bulls. The Open Interest on the one-hour chart from Coinalyze was also rising quickly alongside the Filecoin prices. Overall, this was a sign of strong bullish sentiment in the market.

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Yet, the steep decline in the spot CVD over the past 18 hours suggested that the sellers might be preparing the push the bulls back. This was a signal that demand was weakening and that buyers already in a position can look to book profits.