Filecoin presents a risky bullish idea, but the gains are modest. Should traders consider going long?
FIL fell back to around the $3.1 support level.
On the upside, liquidity increases, which could spark a rally.
Filecoin [FIL] has been holding onto the psychological level of $3.0 since August. The previous retest allowed FIL buyers to seek gains at the high barrier of $3.4. However, the recent retest did not bring the expected profits as a solid bullish reversal remained elusive.
Can bulls benefit from this support in the near term?
Bulls have seized on minor price rebounds in recent days, even though a bullish reversal has proved elusive. However, the move could be risky for investors, especially given the declining demand for altcoins and continued selling pressure.
$3.2 is seen as an immediate resistance, but the next resistance comes from the H12 short order block (OB) of $3.36 – $3.489 (white) formed on August 23. On the other hand, the $3.0 support and the bullish order block (cyan) are crucial on higher timeframes. If the price bounces off this level to $3.2, it could bring modest gains. However, a break below $3.0 will invalidate the bullish bias.
Notably, demand for altcoins in the spot market has declined, as indicated by the falling On Balance Volume (OBV). Additionally, selling pressure remains, as indicated by the falling RSI. This suggests that the bullish idea could actually be a risky setup.
Therefore, investors in altcoins should be cautious and pay attention to the trend of BTC to reduce risks and optimize investment strategies. At this critical moment, understanding market dynamics and key resistance and support levels is essential to making wise investment decisions.
Will liquidity chasing drive Filecoin up?
According to Hyblock Capital's liquidation level data analysis, FIL liquidity is on an upward trend, which is consistent with more upward lines on the liquidation profile. There has been an increase in mid-to-high liquidation levels above the current price level, which may drive FIL prices up in these areas.
The Accumulation Liquidation Level Delta has been negative at higher price areas such as $3.20, $3.25, and $3.28, which shows that short positions have been liquidated more than long positions since October 17. This negative Delta Accumulation Liquidation Level suggests a bullish bias in the market.
However, this bullish sentiment could be called into question if the price of FIL falls below the key psychological level of $3.0 for an extended period of time, invalidating the bullish idea. Improved liquidity and higher liquidation levels suggest that market sentiment remains positive, but investors should remain vigilant and closely monitor the movement of key price levels.
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