A recent AMBCrypto report shed light on why a move beyond $5 appeared feasible. The altcoin had shown strong upward momentum recently, but its rally stalled at the $4.7 highs.
Since Friday, the 24th of April, M has corrected from $4.83, the ATH, to $3.42 at the time of writing.
This was a 29.1% price drop in under a week.
Another AMBCrypto report had highlighted the importance of the mid-point of the Bollinger Bands at $3.55 as a support level.
The bearish technical outlook in the short-term was accompanied by only a modest bullish outlook within the community. The inability to push toward new highs meant traders needed to be prepared for a distribution phase.
The Memecore range potential and its threat to buyers
The H4 swing move higher was used to plot Fibonacci retracement levels.
At the time of writing, M was trading around $3.41, the 61.8% retracement level. Even more encouragingly, the RSI made higher lows while the price made lower lows a few days back.
This was a classic sign that the bearish momentum had ended and the bulls were ready for the next move higher.
There were two arguments to be made in favor of the bears, despite the momentum and price divergence. The first and less convincing one was from the Fixed Range Volume Profile.
The profile’s Point of Control (red) was at $3.53, and represented a local supply zone for Memecore bulls to fight through. It was the node where the heaviest volume unfolded since the swing move’s beginning.
The other, more convincing argument in favor of the bears was the rejection of the $4.7 highs.
This gave rise to the possibility of a range formation with one extreme at $4.7 and the other based around $3-$3.22.
Traders can look to wait for a reaction from this demand zone. A lower timeframe structure flip toward bullish would offer a short-term opportunity, but profit-taking would become more important than waiting for a run to $5 or higher.
Final Summary
- The rejection from the $4.7 highs and subsequent losses meant bullish conviction has been somewhat quelled in the short-term.
- A range formation and a distribution phase within this range are something Memecore investors have to be prepared for.