Decentralized storage platform Filecoin has not had a great performance on the charts in recent months. Since October, it is down nearly 72% in value, from $80 to $22.3 at the time of writing. It had hinted at the start of a downtrend in late September and has steadily moved lower on the charts since October. At the time of writing, a trendline of some importance appeared to be breaking. The past week has seen some short-term bullishness. However, the most pertinent question is: Can Filecoin break through the bearish market structure in the coming weeks?
Source: FIL/USDT on TradingView
The trendline (white) has been of some interest, mainly because of the way the price has respected it since November. However, keep in mind that breaking a bearish trendline does not equate to establishing an uptrend. Rather, this break could mean a run up before the next leg lower for FIL.
Therefore, unless the market structure’s previous lower high at $31.53 is broken, FIL would continue trading within a prolonged bearish structure.
In addition, this lower high had some concurrence with the 23.6% Fibonacci retracement (yellow). This level was plotted based on FIL’s move from $81.22 to $16.82. Therefore, the $31-$32 area can be expected to offer strong resistance, provided FIL is indeed able to climb that high.
Another place FIL may encounter sellers was USD 27, the lowest low prior to the lows at $16.82. A retest of the $27 mark could be viewed as a bearish retest of a support level that FIL had traded last month.
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Source: FIL/USDT on TradingView
The indicators have not yet shown a longer-term trend change for FIL. The RSI on the 12-hour chart formed a bullish divergence into oversold territory last month. Since then, the RSI has climbed steadily and moved past the neutral 50 line, although it may slip at the 57 or 60 readings on the RSI, which has happened in the past.
The CDV showed decent buying volume on FIL’s recent gains, but not yet enough to reverse the downtrend. Similarly, the Directional Movement Index showed that last month’s strong bearish trend may have changed as the +DI (green) moved above 20 while the ADX was also above it. This was a reflection of the steady gains of recent weeks.
Conclusion
The longer term downtrend had not yet broken, but Filecoin could move higher towards the $27 and $32 levels. Flipping these levels to support would provide evidence of a trend change.
This post With steady gains over the past two weeks, should you invest in Filecoin’s short-term bullishness?
was published first on https://ambcrypto.com/with-steady-gain-in-the-past-two-weeks-has-filecoin-broken-out-of-its-downtrend/
