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Analysis

Sonic falls by 18% in 6 days – Why this could be the right time to buy!

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Sonic formed a range within a range, and its approach of the local lows presented an opportunity.
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Sonic falls by 18% in 6 days - Why this could be the right time to buy!
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  • Sonic has posted respectable gains since April, challenging the $0.34 resistance again
  • Altcoin saw its third rejection from the same resistance in May

Sonic [S], at the time of writing, appeared to be trading within a range. This range has been in play since February. When Bitcoin [BTC] hit the $75k-mark, the Sonic token dipped to its low at $0.182. Following Bitcoin‘s rally to new highs, S has climbed to challenge the range high at $0.347.

So, Sonic rallied by 90% while BTC only rallied by 46%. From a percentage gain standpoint, it appeared bullish.

That is not the case when we compare the vastly different market caps of the two tokens though. The $1.26 billion mcap altcoin should theoretically have an easier time posting gains during bullish market phases, compared to the $2.12 trillion asset.

And yet, the 4-month range of S was still unbroken at press time.

Should you buy more Sonic now?

Sonic 1-day Chart

Source: SONIC/USDT on TradingView

The OBV has been on a steady uptrend since April. Despite the repeated rejections at the $0.34 resistance, the OBV continued to make higher highs and higher lows. This may be a sign of sustained demand for S, although the price action was stuck within a range.

Over the past month, a range within a range has likely formed. This extended from the mid-range level at $0.265 to the range high. The 18% dip over the last 8 days meant the 1-day RSI fell below neutral 50.

This momentum would likely see S drop to $0.26-$0.265 level again.

Sonic Liquidation Heatmap

Source: Coinglass

The 1-month liquidation heatmap revealed that the $0.27-level is an area of interest for Sonic traders. The liquidity around this area would likely pull prices lower. Therefore, swing traders can seek to buy Sonic around the $0.265-level, expecting a bullish reversal.

A price drop below $0.26 would be the first sign of bearish dominance. A sustained fall below $0.25 would necessitate these long traders to close their positions and prepare for a move towards the range lows.

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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