FIL Bulls See Massive Price Rise, But Can The Rally Reach Further?

Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.

• Filecoin saw a wild pump of almost 20% in recent hours
• Lower tier buyers can try to cash in their winnings

Filecoin [FIL] has been in a downward trend on the daily time frame since mid-April. But the past 24 hours have been interesting for certain altcoin bulls. FIL was one of them, as it rose 18% in the early hours of July 3.

Read Filecoins [FIL] Price Forecast 2023-24

The lower time structure and trend were bullish, but the $5 level formed a resistance zone that the bulls might find difficult to break on their first try. This is where cautious bulls can make their gains, and also where the next rally might start.

The retracement following the break in market structure presented a buying opportunity over the weekend

Source: FIL/USDT on TradingView

In general, weekends see muted price action, although some weekends can see extraordinary volatility. Last weekend was a quiet weekend for FIL. The price flipped the market structure to bullish on Friday, June 30. Hours later, there was a bad downside candle wick that hit $3.56 before bouncing back to hit $4.25 on July 1.

On-Balance Volume (OBV) took a hit during this downward move, but events since then have shown that buying volume far outweighed selling pressure. The Relative Strength Index (RSI) has entered overbought territory, although this in itself does not indicate that a reversal was imminent.

A series of Fibonacci retracement levels were plotted based on the volatility observed on June 30 and July 1. It showed that the 50% retracement level was $3.91 and was close to testing on July 2. FIL plunged as low as $3,935 but started to climb higher.

Bulls can wait for a downward move before looking for buying opportunities. A drop below the $4.26 level would be a sign of bearish dominance, but a retest of the $4.38-$4.52 level and a bounce could present a buying opportunity in the lower time frames. Meanwhile, traders already in a long position can profit at $4.7 itself, while more ambitious bulls can wait for a foray into the $4.95-$5 region.

The rapid downturn in spot CVD suggested FIL sellers could prepare to reverse the rally

Source: Coin analysis

The indicators of the H4 price chart were firmly on the side of the bulls. The Open Interest on Coinalyze’s one-hour chart also rose rapidly alongside Filecoin prices. Overall, this was a sign of strong bullish sentiment in the market.

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Still, the sharp drop in spot CVD over the past 18 hours suggested that the sellers may be preparing to push back the bulls. This was a signal that demand was weakening and that buyers already in a position could take profits.