Disclaimer: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.
- The one hour command block has served well in the past
- Indicators showed bearish momentum, but that may soon change
Filecoin has traded in a range for the past two weeks. A short-term bullish block of orders from Nov. 10 acted as an area where buyers were willing to bid on FIL. Whether this trend could continue remains to be seen.
Read Filecoins [FIL] Price prediction for 2023-24
Bitcoin fell below the $16.2000 support level and may suffer further losses in the coming days due to this downtrend. This could drive down FIL’s prices alongside the rest of the market.
The low range at $4.08 has been a rock so far
Since Nov. 9, after Bitcoin crashed from $21.4k to $16.2k, Filecoin also found it had some support at $4.08. It formed a range between $4.08 and $4.81, with the midpoint of the range at $4.44. This midpoint served as a good level of resistance last week, which made the formation of the range more believable.
On November 10, a 1-hour candle below $4.08 formed a bullish order block. The ensuing price action broke the bearish market structure of the lower time frame to reach the range highs again. Therefore, a revisit from the bottom of the range was a good buying opportunity, in terms of risk-reward ratio. Profit targets sit at $4.44 and $4.8.
However, repeated retests of a support level tend to weaken it. Additionally, the second test of $4.08 on November 14 was unable to muster a rally beyond $4.44. This suggested that the bulls were weak in the markets. The Relative Strength Index (RSI) held below neutral 50 to show bearish momentum while the Accumulation/Distribution (A/D) indicator was flat in recent days to show a lack of buying pressure .
Therefore, if the long trade failed, a trader can immediately reverse lower and use the bullish order block as a bearish breaker and short FIL. Support levels to the south can be estimated using the Fibonacci extension tool. Based on the decline from $4.88 to $4 on November 9th and 10th, the 23.6% and 50% extension levels were plotted to sit at $3.79 and $3.56.
Open interest rising as price hesitates on support level
Since Nov. 10, open interest behind Filecoin vs. USD contracts has seen a slow ascent. This showed that futures market players were building a position. But in what sense?
FIL’s Long/Short ratio over the past 24 hours has been skewed in favor of the sellers. Therefore, the possibility of a drop below $4.08 during the day cannot be ruled out.