TAO Technical Analysis Feb 1

TAO’s volume story indicates weakening market participation in the downtrend. While high-volume sales signal distribution, oversold RSI and volume divergence carry accumulation potential.

Volume Profile and Market Participation

TAO experienced a 7.79% drop with $233.38 million in trading volume over the last 24 hours, falling back to $199.90. Although this volume level is above the 7-day average volume (around $180-200 million), it stands out in the bearish short-term trend where the price remains below EMA20 ($235.38). The volume profile shows concentration around Value Area Low (VAL) (around $195-200) with increasing volume during recent declines. Market participation is weak; volume stays low during upticks but rises during downticks, which increases the conviction of selling pressure but indicates that institutional buyers have not yet entered. In the Volume Profile, Point of Control (POC) has shifted to $210, meaning sellers are dominant but buyers are testing this level. For a healthy rally, volume must increase during upmoves; the current low participation suggests the trend is tiring.

Accumulation or Distribution?

Accumulation Signals

As RSI approaches the oversold region at 30.49, price-volume divergence is evident: volume increases during recent declines, but the momentum histogram (MACD negative) is weakening. This could be an accumulation signal similar to a ‘spring’ pattern; large players are absorbing low-volume sales. MTF volume levels (1D/3D/1W with 10 strong levels: 2S/1R 1D, 1S/3R 3D, 2S/3R 1W) show volume increases at supports ($178.70, score 74/100). If volume stabilizes here, we can say accumulation is starting – whales are defending the supports.

Distribution Risks

Volume rising to confirm the downtrend is a distribution warning: the 24h volume spike confirms the 7.79% drop, with strong Supertrend resistance at $248.79. High-volume downticks may indicate institutions closing positions. The downward shift in POC and volume increases at resistances ($219.82, score 62/100) keep seller conviction high. If distribution confirms, it opens the door to a bearish target of $80.59 (score 22); note: risk decreases if volume drops during declines.

Price-Volume Harmony

Although price is in a downtrend, volume confirmation is partial: volume is high during declines (233M$ on 7.79% drop), showing conviction, but low during upticks – this divergence signals weakness. In a healthy decline, volume would continuously increase, but here MTF resistance volumes (3D/1W 6R) dominate. Price below EMA20 is volume-wise bearish, but RSI divergence (30.49) awaits volume increase for reversal. Volume confirmation is almost nonexistent; price is falling alone, pointing to exhaustion.

Large Player Activity

At the institutional level, activity is hidden in high-volume downticks: whale wallets show buying traces at supports ($197.40) but not definitively. Volume spikes cluster at supports on 1D, seller-heavy at resistances on 3D. Large players are likely in short positions, synchronized with BTC correlation. For whale accumulation, volume needs to turn back to POC during upmoves; currently distribution tendency prevails but divergence is promising.

Bitcoin Correlation

BTC at $78,887 with -6.25% drop in downtrend, Supertrend bearish. TAO is highly correlated with BTC (beta ~1.5); if BTC supports ($78,221 / $75,736) break, TAO falls to $178. If BTC resistances ($80,429 / $83,160) are broken, TAO rally possible, volume increase required. Altcoin caution with high BTC dominance: TAO volume follows BTC drop, wait for BTC stabilization for recovery. Key BTC levels: Below 78k bearish, above 80k bullish trigger for TAO.

Volume-Based Outlook

Volume-based outlook is bearish leaning but divergent: Short-term distribution risk high (233M$ on drop), bullish reversal if volume decreases at support test (target $296.30, score 13). Watch: Accumulation if uptick volume increases, exhaustion if downtick volume decreases. Monitor volume deltas in TAO Spot Analysis and TAO Futures Analysis. Volume story: Participation weak, conviction low – be patient.