Key takeaways
What is the main bullish signal of a potential TRX rally?
A rising reserve-to-borrowing ratio, indicating increased liquidity and lower risk of debt overhang.
What is the key technical condition for TRX to achieve its price targets?
TRX must successfully break through and hold above the descending resistance line on the chart.
October has been a bearish month for Tron (TRX) investors so far, with the asset seeing an overall performance decline of around 11% during the period.
As the distribution continues, the broader outlook suggests TRX could be gearing up for a rebound as capital reserves continue to lead the way.
Hike in reserve
There has been a significant increase in available reserves within the Tron ecosystem.
This growth comes from investors depositing more jTRX and jUSDT tokens – packaged versions of TRX and USDT – used for DeFi and lending purposes.
Notably, the reserves-to-borrowing ratio has continued to increase, implying that more tokens are available relative to the amount borrowed in the market.
Source: Alphractal
Market analyst Joao Wedson noted that this trend has cooled overleveraged players. According to his analysis, TRX could rebound soon, because,
“Historically, this configuration marked the first phase of the new TRX rallies.”
Accumulation on the rise
Despite the recent increase in reserves, TRX still reflects weak sentiment on lower time frames.
Over the past 24 hours, the asset saw a decline of approximately 1.24% as retail spot investors sold approximately $2.22 million worth of TRX.
Source: CoinGlass
It’s a very different case over a longer period of time. According to data from CoinGlass, spot investors have seen a net accumulation totaling $11.21 million worth of TRX since the start of the week of October 27.
The Accumulation/Distribution (A/D) indicator gives a similar perspective on the chart. Currently, there is more accumulation in the market.
The total accumulation currently stands at approximately 122 billion TRX, reflecting the fact that increased buying activity is taking place in the market.
Source: TradingView
This broad accumulation implies that the overall outlook remains bullish, reinforcing the trend that a rally is likely to occur soon.
Technical outlook
TRX’s rally potential depends on its ability to break above the descending resistance line on the chart.
This level has acted as a demand zone on several occasions, implying that it could trigger a rally from this point if successfully breached.
A confirmed breakout above this descending resistance could take TRX to the $0.32 target level on the chart.
According to market projections, sustained momentum could push the asset towards $0.35 and possibly $0.37.
Source: TradingView
