Over the last two weeks, Filecoin has moved in a narrow range. From 10 November, a short-term bullish order block served as a zone where buyers were willing to bid FIL. It remained to be seen if this trend would continue.
Bitcoin has fallen below the $16.2k support level and may suffer further losses in the coming days as a result of this bearish pattern. This could cause FIL prices to fall along with the rest of the market.
The range low at $4.08 has been a rock so far
Since 9 November, after Bitcoin crashed from$21.4k to $16.2k, Filecoin also found it had some support at $4.08. It formed a range between $4.08 to $4.81, with the mid-point of the range at $4.44. This mid-point served as a good resistance level in the past week, which made the range formation more credible.
On 10 November, a one-hour candle below $4.08 formed a bullish order block. The subsequent price action broke the lower timeframe bearish market structure to reach the range highs once again. Hence, a revisit to the range low was a good buying opportunity, in terms of risk-to-reward. Profit targets lie at $4.44 and $4.8.
However, repeated retests of a support level tend to weaken it. Moreover, the second retest of $4.08 on 14 November was unable to muster a rally past $4.44. This suggested that bulls were weak in the markets. The Relative Strength Index (RSI) stood beneath neutral 50 to show bearish momentum while the Accumulation/Distribution (A/D) indicator was flat in recent days to show a lack of buying pressure.
Hence, if the long trade failed, a trader can immediately flip bearish and use the bullish order block as a bearish breaker and short FIL. Support levels to the south can be estimated using the Fibonacci extension tool. Based on the drop from $4.88 to $4 on 9 and 10 November, the 23.6% and 50% extension levels were plotted to lie at $3.79 and $3.56.
Open Interest on the rise as the price dithers about support level
Since 10 November, the Open Interest behind Filecoin contracts against USD have been on a slow ascent. This showed that futures market participants were building up a position. But in what direction?
The Long/Short ratio of FIL in the past 24 hours was skewed in favor of the sellers. Therefore, the possibility of a drop beneath $4.08 over the course of the day can not be discounted.