Over the weekend, Binance Coin (BNB) broke above the descending trend line it had been trading under since August 23. While the altcoin is still in an uptrend, the rally may be short-lived.
A successful retest of the breakout level is uncertain, as the buying momentum in the market seems too weak to maintain the upward movement. Traders are watching closely to see if BNB can hold above this key level or if the breakout will falter.
Binance Coin Rally at Risk of Decline
After peaking at $600 on August 23, BNB experienced an increase in selloffs, pushing its price below a descending trend line. This bearish pattern occurs when selling pressure prevents an asset from breaking above a resistance level.
Last weekend, selling pressure eased, allowing BNB bulls to push the price above the trend line. However, the uptrend may soon face a correction as current buying activity appears insufficient to sustain the rally.
This is reflected in BNB’s declining Chaikin Money Flow (CMF), which tracks capital movement in and out of an asset. The CMF has dropped below the zero line, indicating a bearish divergence with the coin’s rising price.
This divergence suggests that while BNB’s price is rising, the buying pressure behind the rally is weakening. It signals that the uptrend may be losing momentum and that a price correction or reversal could be imminent.
Additionally, Binance Coin’s negative Bull Bear Power highlights the prevailing bearish bias limiting its rally. This indicator tracks the balance between buyers and sellers.
A negative reading, such as the current -17.1, shows that selling pressure is stronger than buying momentum, signaling that bears are currently dominating the market.
Read more: How To Trade Crypto on Binance Futures: Everything You Need To Know
BNB Price Prediction: Futures Traders Set Eyes on a Rally
Despite the likelihood of BNB shedding recent gains, futures traders remain unfazed. They continue to favor long positions, as indicated by the coin’s positive funding rate across exchanges.
At press time, BNB’s funding rate stands at 0.0005%. A positive funding rate suggests that more traders expect a price rally than a decline.
If market sentiment shifts from negative to positive and buying pressure increases, these long positions could become profitable, potentially pushing BNB’s price to $522.90 and paving the way for a rally toward the $600 mark.
Read more: Binance Coin (BNB) Price Prediction 2024/2025/2030
However, if the bearish divergence in the CMF leads to a failed retest of the breakout line, BNB’s value could drop to $468.90.
Disclaimer
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Source: https://beincrypto.com/bnb-price-rally-may-be-misleading/