Over the past week, TRON (TRX) has caught the eye of many traders, suggesting there might be more ups and downs ahead. Even though there was a slight decrease recently, the 7-Day Relative Strength Index (RSI) remains in a zone indicating overbuying.
A notable observation is how the long-term Exponential Moving Average (EMA) line is getting closer to the short-term EMA line. For a deeper understanding, it’s recommended to read the full analysis.
TRX Faces Potential Correction Amid Overbought Conditions
In the latter days of February, TRX’s 7-Day Relative Strength Index (RSI) peaked at an alarming 91, indicating an extreme overbought status. However, since reaching this peak, the RSI has experienced a notable decline, now resting at 71. Despite this decrease of approximately 22%, an RSI value above 70 still signifies an overbought market condition.
TRON Price and RSI 7D. Source: Santiment
This decline suggests that TRX might be ripe for a price correction, as traders who perceive the coin as overvalued at its current levels may begin offloading their holdings. The RSI serves as a momentum oscillator, gauging the speed and change of price movements. Typically oscillating between zero and 100, it’s utilized to identify overbought or oversold conditions in an asset. When the RSI surpasses 70, it indicates potential overvaluation, while a reading below 30 suggests possible undervaluation.
Given TRX’s consistent RSI levels above 70, there’s an increased likelihood of a price retracement. This could prompt investors and traders to capitalize on profits, thereby escalating selling pressure and precipitating a decline in price.
TRX Distribution Dynamics: Traders Gain Larger Stake
The chart illustrating TRON (TRX) Balance by Time Held offers insights into the distribution of TRX among different holder categories:
- Hodlers: Those who have held their coins for over a year.
- Cruisers: Holders with a period between one month and twelve months.
- Traders: Individuals holding their coins for less than a month.
Over the past week, there has been a noticeable surge in the TRX supply held by Traders. Their TRX holdings surged from 2.95 billion to 3.73 billion, marking a substantial increase of approximately 26.44%. This surge suggests that short-term holders are securing a larger share of the circulating supply.
Impact of Increased TRX Holdings by Short-Term Traders
The substantial growth in a coin’s presence among short-term holders typically signals an imminent rise in price volatility. Short-term traders tend to react swiftly to market fluctuations, making buying and selling decisions based on recent trends and events. As a result, this behavior can amplify the swings in the coin’s price, leading to heightened volatility.
The significant increase in the balance of TRX held by Traders can potentially influence the coin’s price in several ways. Should these traders opt to sell their holdings, it could flood the market with an influx of supply, exerting downward pressure on the price.
Implications of TRX’s Death Cross and Price Analysis
The recent chart depicting TRX’s price action relative to its Exponential Moving Average (EMA) lines reveals a significant development: the 200-day EMA has crossed below both the 20-day EMA and the price line. This occurrence, known as a ‘death cross’, typically signals a bearish trend, indicating a decline in long-term price momentum. Consequently, this could exert further downward pressure on TRX prices.
EMAs, which provide a weighted average of past price data, assign greater significance to recent price movements. These lines serve as dynamic support and resistance levels within the market.
TRX EMA. Source: Tradingview
In examining the IOMAP (In/Out of the Money Around Price) chart, it becomes evident that TRX has relatively weak support at $0.127. Should this support level prove insufficient, TRX’s price may test lower levels at $0.123 and $0.119, potentially representing a correction of up to 10%.
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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