•  TAO fell over 6 percent after facing rejection at $386 near the top of its rising channel

  • Bearish divergence on RSI lined up with a fair value gap rejection and triggered downside

  • Price now trades under $390 with traders watching if it will drop below $360 or bounce back

TAO token dropped 6.2% after rejecting $386, following a short entry at $385 that played out with precise timing. The asset now trades at $368.07, down -$24.08 from its entry, with a bearish divergence confirmed and rejection at a fair value gap (FVG). The move signals weakening momentum as TAO holds below the key $390 level, maintaining a bearish short-term outlook.

https://twitter.com/CryptoPatel/status/1917431229583937564 Key Breakdown After Channel Peak

TAO had been moving within a rising parallel channel since early April, gradually ascending from the $220 zone toward the $400 mark. The channel remained intact until April 29, when price action formed a local high near $386. This level triggered a short position entry, marking a key resistance.

The asset failed to sustain momentum above $386, leading to a swift 6.25% drop over the next few sessions. The move came as bearish divergence appeared on the RSI, indicating reduced buying strength. The pattern typically suggests a loss of upward energy even when price continues to climb.

Traders monitoring the FVG zone found rejection aligned with this bearish divergence. The failed breakout attempt has shifted the narrative toward a pullback. As long as TAO remains under $390, technical signals suggest the bears maintain control.

Risk Adjustments and Trade Management

The setup included a strategy with risk adjustments for tighter trade management. The stop-loss was advised to shift from $410 to $400 to limit exposure. This adjustment allowed for securing gains while controlling downside risk amid ongoing volatility.

Traders were also encouraged to consider partial profits, locking in gains near peak price levels around $385 before deeper price rejection. The advice was grounded in tactical execution, reinforcing discipline around trade setups and avoiding greed-driven hold strategies.

The price currently trades at $368.07 on KUCOIN. The token’s intraday high reached $369.21 while the low dipped to $364.35. This movement marks a significant short-term shift in price structure and momentum bias.

Can TAO Reclaim Bullish Momentum or Is More Downside Ahead?

With TAO now under $390, the pivotal question is clear: Will the token recover above this level or continue its decline?

The 3-hour chart shows consistent lower highs forming since the $386 rejection. Momentum has weakened and RSI continues to drift below the descending trendline, reinforcing bearish signals. Price must close decisively above $390 to reverse this pressure.

If buyers regain control and reclaim $390, the next test lies around $400, where earlier sell orders were concentrated. However, failure to clear $386 again may validate more downside targets. Breaks below $360 could open paths to $340 and $320 respectively.

Market sentiment remains cautious. Traders are letting the setup work as instructed in the original guidance. The disciplined strategy favors setups over speculation, awaiting confirmation before committing new capital. TAO remains range-bound with bearish risk prevailing in the near term.