Bonk (BONK) has been trading within a nearly six-week-old range, with the approach of the lows offering a favorable buying opportunity in terms of risk and reward.
While technical indicators suggested a bearish trend, the price movement hinted at a potential reversal, possibly occurring soon. Traders might need to consider using wider stop-losses due to the potential for a liquidity hunt.
BONK’s Bearish Market Structure
At the time of writing, BONK exhibits a bearish market structure on the 12-hour chart. For the past six weeks, BONK has been trading within a range spanning from $0.00000944 to $0.0000171.
Source: BONK/USDT on TradingView
The Relative Strength Index (RSI) has remained below the neutral 50 level since mid-January, indicating bearish momentum and an ongoing downtrend. This aligns with the observed market structure. Additionally, the On-Balance Volume (OBV) has gradually declined over the past ten days, indicating increased selling volume.
The resistance around the mid-range at $0.0000126 rejected bullish attempts on January 28th. Currently, BONK is nearing the lower end of the range. However, buyers should be cautious of liquidity hunts below this range and adjust risk management and stop-loss orders accordingly.
A significant drop below $0.0000075 would suggest a strong downtrend, with the next support level targeted at $0.0000048.
Analyzing Futures Market Outlook
Data from Coinglass was examined to gain insights into the futures market outlook. Since mid-December, there has been a consistent downward trend in Open Interest (OI). Even following the formation of a trading range, the OI continued its decline.
Source: Coinglass
The Funding Rate on Binance showed a slight positive trend, but this alone wasn’t sufficient evidence for an impending rebound.
A notable increase in buying volume on the On-Balance Volume (OBV) combined with a rise in Open Interest would serve as a positive signal indicating that BONK might rebound towards the range highs.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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