Journalist
Published:
Pi Network (PI) was one of the altcoins in the spotlight. With a 43.1% rise from Thursday’s low of $0.132, PI traders and investors may be tempted to buy the token. The idea of buying becomes even more tempting when the gains are compared to major crypto assets.
Bitcoin (BTC) increased by 8.3% and Ethereum (ETH) by 9.2% during the same period. Still, traders must be careful and not give in to FOMO or relative strength arguments.
Evaluating the Bullish Argument
The Pi network upgrade is one of the reasons behind the token’s recent significant gains. AMBCrypto reported that the transition to a decentralized mainnet was a step forward in shifting responsibility from developers to the community.
A breakout of a long-term descending wedge has also been demonstrated. This could potentially push prices up to between $0.267 and $0.28.
However, the picture remained skewed downward at the time of writing. The local supply zone at $0.20 remained firm in the face of a buying frenzy.
Why buyers should be wary of the PI rally
Source: PI/USDT on TradingView
Volume indicators were neutral at best, despite the high trading volume. The OBV was within notable distance of a new high, and the CMF on the daily timeframe
The 1-day chart reinforced the importance of the $0.2 resistance. The recent, rapid gains achieved and facing rejection from this supply band was not a good development.
Indeed, counter-intuitively, the surge of high volume into a key resistance area is usually followed by an exhaustion of buyers and a retracement of any gains made. In other words, smart money tends to use these moves to sell.
Traders can wait for a breakout beyond $0.2 and a retest of it as support to buy. Given the general market sentiment, this was a very risky venture.
Instead, swing traders and investors may maintain their bearish bias, which is consistent with the long-term bearish trend.
Final Summary
- Pi network token prices saw a sharp rise to break out of a falling wedge at the same time the network upgrade announcement was released.
- The rapid shift to the air supply zone due to high trading volume and rejection in recent hours is likely to prove to be a sign of buyer exhaustion and not conviction.
Disclaimer: The information presented does not constitute financial, investment, business or other advice and represents the opinion of the author only.
