Decoding Starknet’s breakout: What a 7-month range says about the next leg

Key Takeaways

Why has Starknet rallied recently?

The rally was likely due to the accelerated STRK staking, rising to 20% of the total token supply, combined with high buying volume over the past week.

What’s next for STRK?

Strong organic demand and the potential for a short-squeeze meant that prices could potentially skyrocket in the coming days.

Starknet [STRK] rallied 40% in 24 hours, with a commensurate increase in daily trading volume, according to CoinMarketCap. Its Open Interest rose by 51% in the same period, but its funding rate has fallen into negative values.

This meant that the short trade was likely overcrowded and that futures traders believed prices would fall soon.

However, evidence showed underlying spot demand was strong for STRK, setting the conditions for a short squeeze.

The STRK rally was likely sparked by multiple factors. Some of them included a high percentage of token supply staked. The rising Total Value Locked (TVL) also signaled an increased user base.

STRK range breakout implications on the higher timeframes

Source: STRK/USDT on TradingView

The weekly chart showed a 7-month-long range formation for Starknet.

This represented a long period of consolidation between $0.097 and $0.197. At the time of writing, a weekly session close above the range highs was brewing and would be complete in a few hours.

Moreover, the high trading volume and the range breakout were extremely bullish, especially for long-term holders. For new traders looking to enter the trade, it is not too late either.

They might need patience to enter the bulls’ side upon a lower timeframe retracement.

Former resistance turns into demand

The RSI crossed over above neutral 50, and the OBV surged higher. Both indicators underlined the bullish strength evident on the price charts. The next weekly swing levels were at $0.539 and $0.8.

Source: STRK/USDT on TradingView

The former resistance zone at the $0.19 region is a strong demand zone now. A retest of this area would offer a good buying opportunity.

The short-squeeze potential meant that swing traders might not get the retracement they want. That is no reason for FOMO.

For the next week, if the rally continues, the bullish targets would be $0.279 and $0.293.

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