Bitcoin [BTC] and the cryptocurrency market rebounded slightly on October 4 in what was considered a “buy the rumor” event as traders looked ahead to U.S. jobs data. Celestia [TIA] led the rally with a 12% gain in 24 hours, trading at $5.19 at press time.
Despite the recent gains, TIA is still down around 20% over the past seven days. As the bullish sentiment surrounding TIA increases, will this trend be sustained or will profit-taking trigger a price correction?
Celestia's Bullish Pattern
Celestia has formed a “cup and handle” pattern on the daily chart, which usually indicates an uptrend and the possibility of a price move higher.
Source: Tradingview
For this pattern to hold, it needs to be supported by increasing buying volume. The volume histogram bars have turned green, indicating that buying activity has increased to outpace selling activity.
However, a strong buy signal will be formed when the Relative Strength Index (RSI) crosses above the signal line. Currently, the RSI line is showing signs of rising, but the bullish momentum has not been confirmed to support further growth.
A similar pattern is seen in the Chaikin Money Flow Indicator (CMF), with a negative reading of -0.04. This indicates that selling pressure is higher than buying pressure. A positive move could support a breakout from this pattern.
If the bullish thesis holds, TIA could rally another 35% from current prices to test the breakout resistance at $6.92. A bullish breakout from this pattern would open the door to a stronger rally.
Liquidation data analysis
Celestia’s liquidation heatmap shows that there are more shorts than longs on TIA. This data suggests that many traders are betting on further price declines, indicating strong bearish sentiment.
Source: Coinglass
Additionally, funding rates also reinforce this bearish thesis. TIA’s funding rates have been largely negative since early September, suggesting that traders are not confident in TIA’s long-term recovery.
When funding rates remain negative for a long period of time, it can drag prices lower if market sentiment does not turn positive.
Source: Coinglass
Additionally, open interest remains above $200 million at press time, according to Coinglass, suggesting that traders betting short on TIA are holding on to their positions despite the recent price recovery.
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