Disclaimer: The information presented does not constitute financial, investment, trading or any other type of advice and solely represents the opinion of the author
- FIL dropped to a crucial support level at 38.2% Fib level.
- Demand improved but sentiment slipped to near neutral levels.
Filecoin [FIL] was one of the big losers last week. It has lost over 25% in value over the past seven days, according to CoinMarketCap. But the decline has reached a critical support level that could attract bulls to enter the market if it holds.
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Can the 38.2% Fib level be sustained?
Source: FIL/USDT on TradingView
FIL doubled its value in mid-February thanks to its planned Filecoin Virtual Machine (FVM) in March. It rose from $5 to $10 but was rejected after Bitcoin [BTC] lost the $25,000.
The decline has reached a key support level at 38.2% Fib level ($6.519). The level was a key resistance level in 2022, especially in the second half of August, September and November. As such, it could offer bulls an entry point if it holds steady.
Bulls can target the 61.8% Fib level ($7.662) or the bearish order block at the 78.6% Fib level ($8.5). The uptrend could be accelerated if BTC breaks above $23.35K and surges higher. But bulls might wait for a pullback to retest the 38.2% Fib level to confirm the uptrend before making moves.
Alternatively, short sellers can sell high, just below the 38.2% Fib level ($6.519), buy back cheap when FIL falls to the 23.6% Fib level ($5.811), and pocket the difference. However, short sellers can take advantage of this additional opportunity if FIL closes below 38.2% and confirms another downtrend.
The RSI declined but showed signs of pivoting near equilibrium. However, there was a looming death cross, as shown by the MACD (Moving Average Convergence Divergence), which could complicate matters for bulls if it materializes.
To read Filecoin [FIL] price prediction 2023-24
Sentiment fell to neutral levels, but demand improved
Source: Santiment
According to Santiment, FIL’s weighted sentiment reached high positive levels in mid-February following the planned Filecoin Virtual Machine (FVM) announcement.
It shows that the news generated positive social interactions and boosted investor confidence in the token. Likewise, the increased funding rate shows that demand for the token has increased over the same period.
However, at the time of writing, sentiment had dipped near neutral levels, in part due to prevailing macro headwinds following January’s elevated inflation.
Still, demand from FIL is improving slightly at press time and could fuel recovery efforts if support halts the slump.
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