Prices Under Correction Threat With $8 Breakdown

Over the past three months, the Filecoin (FIL) price action has shaped into a cup and handle pattern. The $5 psychological level formed the bottom support for this pattern and bolstered a new recovery rally. Though a bull-run nearly doubled the altcoin within a week, the supply pressure at $9.5 has limited the bullish growth.

Key points: 

The FIL price shows a perpendicular growth in the daily time frame chart
The 20 and 100 DMAs are nearing a bullish crossover
The intraday trading volume in Filecoin is $480.1 Million, indicating a 17.8% gain

Source- Tradingview

In late July, the FIL price showed a perpendicular growth and surged 118.3% higher to its current record high of $11.24. However, the altcoin couldn’t sustain and reverted immediately with higher price rejection, indicating profit booking from traders with short-term views.

Furthermore, the post-correction rally attempted to resume the prevailing recovery but could not surpass the $95.4 mark. On August 7th, the FIL price turned down from this local top, and the resulting 15.5% fall revealed the formation of a double top pattern.

This bearish reversal pattern showcases its neckline support at the $8 mark. Moreover, this support breakdown will offset the cup and handle pattern and trigger the completion of the double top.

As per the technical setup, the double top pattern should plunge the coin price by 20% to hit the $6.3 support.

On a contrary note, if the altcoin sustains above the $8 support, the prices may consolidate for a few more sessions and keep the cup and handle pattern intact.

Technical indicator

Bollinger band- a reversal from the indicator’s upper band usually triggers a retracement to the neutral line. The coin chart shows this midline currently at $7.10, and thus the altcoin is likely to complete the bearish pattern.

MACD Indicator: A bearish crossover between the fast and slow lines may soon trigger a sell signal and encourage the $8 support breakdown. Moreover, the faded bars on the histogram chart indicate losing bullish momentum.

Resistance levels- $9.8-9.5, and $12
Support levels- $8 and $7.1