February 7, 2023

disclaimer: The findings of the following analysis are the writer’s sole opinion and should not be taken as investment advice

  • NEAR formed a bearish bullish wedge
  • A bullish breakout and intraday close above USD 1,915 would invalidate the bearish forecast

NEAR’s recent rally could run into trouble if bearish sentiment continues to haunt Bitcoin [BTC]. At press time, NEAR traded at USD 1,740 and could easily entice traders to enter a long position. Looks can be deceiving and technical indicators show that NEAR’s uptrend could face headwinds.

Read NEAR’s price forecast 2023-2024

NEAR Forms a Rising Wedge: Are the Bears Preparing for Carnage?

Source: TradingView

In September and October, the price action of NEAR formed a rising wedge. This was followed by a bullish breakout that started a short-lived uptrend after the FTX implosion slowed the rally.

At the time of publication, NEAR’s price action formed another wedge chart pattern. The only difference was that the recent wedge pattern was a bearish rising wedge that could put NEAR on a downtrend. The indicators for the Relative Strength Index (RSI), Directional Movement Index (DMI) and On Balance Volume (OBV) all suggest that NEAR could move lower.

After pulling out of oversold territory, the RSI was at 40, still just below the neutral level of 50. This indicated that buyers were facing strong resistance from sellers despite increasing buying pressure.

The DMI reinforced the above trend. The red line (sellers) was above 25, indicating that sellers are still influencing the market. On the other hand, the green line (buyers) was well below 20, indicating that buyers still had a long way to go to take full control of the market.

Moreover, the OBV recently reached highs but was moving sideways at the time of writing. This showed that the recent increase in trading volume was on the verge of stagnating, which could undermine the high buying pressure.

A downside breakout of the rising wedge could therefore fall NEAR to new support at $1,441 within a few days or weeks.

However, a bullish breakout and subsequent breach of the current USD 1,915 resistance would invalidate the above tendency. Such an invalidation will see NEAR’s new target at the bearish order block within the 38.2% and 50% Fibonacci pocket.

NEAR recorded a drop in open interest from the third quarter

Source: Coinglass

NEAR’s open interest (OI) has been falling since the third quarter and a recovery was nowhere in sight, according to data from Coinglass. This meant that money had been flowing out of NEAR’s derivatives market since September, which was a bearish outlook.

Defillama data support this view. The data shows that the total value of NEAR locked at the time of publication fell from $250 million to $78 million. Given the declining OI, NEAR could therefore fall further.

However, a bullish BTC could affect the NEAR price rise and counter the above bearish prediction. Thus, traders should keep a close eye on BTC’s performance.

Leave a Reply

Your email address will not be published. Required fields are marked *