In the world of cryptocurrencies, the market dynamics can change rapidly. One recent example is the bearish pennant pattern formation observed in the 4-hour time frame chart of the Filecoin price. For those unfamiliar with this chart setup, it generally signals a temporary pause from the prevailing downtrend and could potentially trigger aggressive downturns. This has several implications for the future trend of Filecoin’s (`FIL`) price.
With a forecast of a 12% downfall upon a successful breakdown, the potential decline could face demand pressure at $4.2, $4, and $3.55. In the meantime, the intraday trading volume in Filecoin is $5.5 billion, which translates to a 7.4% loss. This is happening amidst a continuing indecisive trend for the market leader, Bitcoin.
Currently trading at $4.391 with an intraday loss of 2.88%, Filecoin’s price appears to be consolidating within the converging trendlines of the bearish pennant pattern. If this pattern persists, the price may breach the support trendline, thus igniting further selling momentum.
Assuming the mentioned breakdown occurs, the first target is the distance between the pennant triangle’s initial swing high and swing low. This would result in a tumble of 12% to the $3.885 mark, impacting both traders and investors. However, if a breakout from the triangle’s resistance were to happen, it could negate this bearish outlook.
For short-sellers looking to make an entry, a successful breakdown below the pennant pattern support would reinforce the continuation of the prevailing downtrend. In this case, the falling Filecoin price could drop below the $4.22 and $4 psychological support levels, eventually hitting the $3.855 mark.
As per the Bollinger Band indicator, a potential breakdown below the ascending trendline would challenge the lower band, signaling an opportunity for momentum selling. Furthermore, the Directional Movement Index (DMI) reveals the bearish trend remaining intact, as the DI- (orange) slope moves higher towards the DI+ (blue).
It is essential to understand that the presented content in this article is subject to market conditions and serves as an educated forecast based on technical analysis. Cryptocurrency investments depend on various factors that can alter outcomes. As such, performing market research before diving into any investments is strongly recommended. This article, along with its author and the publication, holds no responsibility for personal financial losses that may arise from the volatile nature of cryptocurrencies.
Source: Coingape
