CRYPTO: Filecoin will meet this challenge in attempting a breakout

Filecoin will meet this challenge in attempting a breakout

The altcoin market has been reliving some of the buying pressure built up during the first week of October. Most altcoins fell into a lull as market leader Bitcoin eased around the $55K mark. To put this into perspective, the highest gainer among the top 10 cryptos was Solana after a 2.6% increase over the last 24 hours.

However, another narrative seemed to be brewing down the crypto ladder. The likes of  Shiba Inu, Filecoin, CELR opposed the broader market trend and continued to see capital inflows. Filecoin, in particular, observed a 10% jump compared to yesterday’s close. On the charts, an up-channel was responsible for its price progression.

A breakout from here would set FIL towards the $90-mark, from where 6th September’s swing high of $120.3 would be targeted. However, expect bears to be hot on their heels.

Filecoin 4-hour Chart

Source: FIL/USD, TradingView

Much like rest of the broader market, Filecoin shed a large chunk of its value in September due to a series of mini flash crashes. The alt declined from a high of $120.3 to a low of $51 in less a month- marking a plummet of nearly 60%. Since then, FIL has been on a gradual path to recovery.

The candles oscillated within an up-channel over the past two weeks, with a false breakout observed on 1 October. Now bulls have cleared the first few hurdles present at $66 and $76. With the 4-hour 200-SMA (green) now running bullish as well, an upwards breakout was certainly on the cards. An immediate close above 23rd August’s swing high of $82.5 could confirm a breakout and lead to another 9%-12% hike.

To negate this outcome, bears would need to target a close below the confluence of the 4-hour 200-SMA and $76 support. This would set FIL for a new higher low at the lower trendline.

Reasoning

The 4-hour MACD and Awesome Oscillator traded comfortably above their respective half-lines and were expected to fuel some more buying pressure in the market. However, the Relative Strength Index’s overbought readings did warrant a near-term reversal. The index also formed a slight bearish divergence with respect to FIL’s price action.

Conclusion

FIL had a small window to enforce an immediate breakout above its ascending channel. Another 9%-12% surge is possible if buying pressure is maintained over the coming sessions. Near-term hurdles stemmed largely from an overbought reading and a bearish divergence along the RSI. A higher low was projected if sellers take over.

This article was first written on yusmid.com


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