A recent report from AMBCrypto shed light on why surpassing $5 seemed feasible. The altcoin recently showed strong upward momentum, but its rally stalled at the high of $4.7.
Since Friday, April 24, M has fallen from $4.83, the ATH, to $3.42 at the time of writing.
This is a price drop of 29.1% in less than a week.
Another report from AMBCrypto had highlighted the importance of the Bollinger Bands midpoint at $3.55 as a support level.
The short-term bearish technical outlook was accompanied by only a modest bullish outlook within the community. The inability to reach new highs meant traders had to prepare for a distribution phase.
The potential of the Memecore line and its threat to buyers
The H4 swing move upwards was used to plot Fibonacci retracement levels.
At the time of writing, M was trading around $3.41, the 61.8% retracement level. Even more encouraging, the RSI made higher lows while the price made lower lows a few days ago.
This was a classic sign that the bearish momentum was over and the bulls were ready for the next move higher.
There were two arguments in favor of the bears, despite the price momentum and divergence. The first, and least convincing, came from the fixed range volume profile.
The profile control point (red) was $3.53 and represented a local supply zone through which Memecore bulls could fight. This was the node where the heaviest volume occurred since the beginning of the swing motion.
The other, more compelling argument in favor of the bears was the rejection of the $4.7 highs.
This gave rise to the possibility of a range formation with one extreme at $4.7 and the other around $3 to $3.22.
Traders can wait for a reaction from this demand zone. A shorter calendar structure reversal to an uptrend would provide a short-term opportunity, but profit-taking would become more important than waiting for a rise to $5 or more.
Final Summary
- The rejection of the $4.7 high and subsequent losses mean that bullish conviction has been somewhat assuaged in the short term.
- Memecore investors should prepare for the formation of a lineup and a distribution phase within that lineup.
