Binance Coin (BNB) has regained footing after a sharp decline towards support and appears poised to start a short-term rally.
Important price zone
On May 10, BNB hit an all-time high of $692 before crashing. After a long period of consolidation, it rose again but only peaked at $669 on November 7th. Since then it has fallen by 45%.
The move down led to a local low of $336 on Jan. 24. It also served to confirm the $335 area as support. This area previously acted as resistance (red icon) in July 2021 before turning into support (green icon) in September. Therefore, BNB could bounce back from here.
Trader @CryptoTony_ tweeted a BNB chart and said that it is likely to bounce off the $325 horizontal support area.
The source: Twitter
Technical indicators for the daily time frame are yet to confirm that a bullish reversal is imminent. However, the daily RSI shows an oversold level of 20. The RSI is a momentum indicator and readings below 30 are generally considered to indicate an oversold market.
This reading is even below the July 2021 low (red icon) before a significant move higher.
If BNB can emerge from here, the next resistance is at $503. This is the 0.5 Fib retracement level and horizontal resistance area.
The two-hour chart shows BNB deviating above the $387 resistance area (red circle) before falling back below it.
The trend since January 22 looks like an ABC corrective structure. Therefore, this time frame supports the possibility that the trend remains bearish.
The number of waves isn’t entirely clear, but there are two main possibilities as to what could be happening from here.
The first possibility suggests that price action since the July 2021 low is part of an incipient crossover wave. In this case, the continuous decline since November 2021 is just a correction and BNB will eventually move towards new highs.
The second possibility suggests that the entire BNB decline since April was part of a major ABC correction (white). In this case, BNB completes the fourth sub-wave (red) of a 5-wave bearish impulse and could continue falling to $200 after a bounce.
A move above the low of sub-wave 1 (red line) at $510 will invalidate that particular wave number.
With both scenarios suggesting that BNB is likely to rise in the short term, the shape of the upward move will help determine which wave number is correct.
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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