SEI flashes buy signal – But traders should watch THESE risks

Key Takeaways

Sei presented a good buying opportunity after retesting the range lows, and was up 5.3% in under three days. Does this opportunity outweigh the risks, such as weak sentiment?

The altcoin market has been moving sideways over the past month. At press time, it lacked the strength to trend higher like it did in July and the first half of August.

Source: TOTAL2 on TradingView

The altcoin market capitalization chart showed how the market has been affected by the Bitcoin [BTC] volatility in recent weeks. Ethereum [ETH] has held up reasonably well, defending the $4.3k level against selling pressure.

AMBCrypto observed that the ETH/BTC saw an 8% dip, which could be an early signal of capital rotation into Bitcoin.

In these conditions, Sei [SEI] presented a buying opportunity for swing traders. So, should you look to long SEI when capital flow might be pointed toward BTC?

How can traders navigate the risks of buying SEI now?

Source: Ali Martinez on X

In a post on X, crypto analyst Ali Martinez observed that SEI showed a buy signal after rebounding from the local range lows at $0.27.

The next price targets are $0.32 and $0.37, the next important levels within the range-bound price action of SEI.

Source: SEI/USDT on TradingView

On the 4-hour chart, SEI has a bullish market structure. To maintain this, it has to keep above the higher low at $0.2814, made on the 3rd of September.

The OBV has not made a new lower low over the past week, and the MFI has begun to clamber higher. Together, they were signs that a Sei rally was possible.

Source: Coinalyze

However, this bullish outlook was not reflected in the derivatives market. Over the past two days, SEI made a 9.39% rally, reaching from $0.27 to $0.296. Yet, the Open Interest did not trend higher.

Coinalyze data showed that the OI sank from $120 million to $114.6 million partway through the rally. It reflected a lack of short-term bullish conviction among speculators.

The lack of momentum for the altcoin market in recent weeks, combined with the short-term bearish sentiment from the OI trends, showed that SEI could be a risky buying opportunity.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion