Pi Network [PI] has been on the decline, with roughly 13% of the asset’s value dropping as of writing.
The decline followed the stretch of losses witnessed across the crypto market within the same period. The typical question now is what comes next as the coin may see further losses.
Chart analysis of PI gives the clearest insight into why a drop could be near, particularly as the asset is trading within a bearish flag pattern.
The pattern forms when an asset initially sees a leg down in the market, then consolidates within descending but parallel support and resistance lines, followed by another leg down.
Currently, PI has passed the first stage, and it’s consolidating. But what’s more important is that it’s testing the support. The support line is a critical level for whether the asset sees a decline beginning to form the lower leg, consolidates further, or invalidates the pattern entirely.
The case for PI, presently, is that the indicators show a leg down could be closer, and traders may need to brace themselves for it.
Bearish momentum continues to mount
There’s clear bearish momentum showing that PI is likely to see a further decline in the near term.
One of the indicators pointing to this is the Parabolic Stop and Reverse (SAR), which uses dots to determine trends and momentum. The placement of dots above price implies strong selling pressure, adding to the chances that price drops further.
This adds to the chances that the asset, trading on the edge, could still witness a further drop in the near term. Adding to this is the Moving Average Convergence and Divergence (MACD).
At press time, the MACD has just formed a ‘Death Cross’ pattern, which is based on the blue MACD line crossing below the orange signal line on the chart, indicating that sellers are more dominant.
The expanding red histogram bars suggest that price could continue moving lower, with more losses likely to follow.
Once both lines cross into the negative side of the chart, there’s a higher chance that the losses on PI intensify even further, with the asset declining and potentially dropping below the support level.
The sentiment shows clear selling pressure
The Sentiment tracker by CoinMarketCap shows that the consensus among investors in the market is clearly bearish.
This tracker works by using a scale between -10 and 10 to determine where investors fall. The closer the reading is to either extreme, the stronger the bullish or bearish sentiment in the market.
For PI, the Sentiment has a reading of negative -7.09 at the time of writing, which ultimately implies that investors are more likely to sell.
The market sentiment is close to the extreme, while growing mindshare could limit a price rebound and increase the risk of a further drop. For now, investors need to be cautious as PI is now in a more volatile state in the market.