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- Arbitrum has a longer-term bearish bias and short sellers could soon get an opportunity
- The local highs on the daily chart could be tested again this week, but can the bulls get past them?
Arbitration [ARB] bulls had some success this past week. The trend has been overwhelmingly bearish since late August, but on September 12, things started to turn for the better. However, the price chart showed that the short-term gains could be erased as the ARB approached a strong resistance region.
Read Arbitrums [ARB] Price forecast 2023-24
Prices aside, Arbitrum tokenomics has been a talking point. It is another factor that traders and especially long-term investors need to be aware of. This is why the bullish momentum could come to a halt in the coming week.
The Fibonacci retracement levels and liquidity pockets to the north are worth watching
Source: ARB/USDT on TradingView
Based on the drop from $0.923 to $0.739 that started on September 8, a series of Fibonacci retracement levels (light yellow) were plotted. It showed the 61.8% and 78.6% levels at $0.853 and $0.884, marking them as levels where a bearish reversal could occur.
ARB’s market structure on the one-day chart was bearish, although it was bullish on the H4 chart. Similarly, the Relative Strength Index (RSI) has recorded strong upward momentum in recent days. Furthermore, the Chaikin Money Flow (CMF) also spiked higher, indicating notable capital inflows into the Arbitrum market.
Still, On-Balance Volume (OBV) has remained stubbornly flat over the past ten days even as prices moved higher, suggesting a lack of demand is behind this move. Therefore, short sellers can wait and watch the token’s reaction from the $0.88-$0.9 region.
Could liquidity pockets just above $0.9 spur ARB?
Source: Coinalyse
Data from Coinalyze pointed to bearish sentiment in the near term. The Open Interest (OI) fell over the last 24 hours as Arbitrum recorded a dip from $0.87 to $0.836, which was a sign of discouraged bulls. The Spot Cumulative Volume Delta (CVD) has also been on a downward trend since September 16, underscoring the selling pressure in the spot markets.
Source: Mob graph
The chart above showed large sell orders in the $0.84-$0.912 range, which amounted to just over $1 million. Additionally, the $0.91-$0.93 zone was important as it was close to the previous lower high on the daily time frame.
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Therefore, it was also possible that the current rebound could reach $0.92 before the bulls get exhausted and the bears can take control again. To the south, a bearish target would be the lows at $0.739 and the 23.6% Fibonacci extension level at $0.6955.