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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The demand behind BONK has fallen despite the short-term rally.
- The possibility of a range formation was present, and BONK’s reaction at the local resistance would be illuminating.
Bonk [BONK] prices bounced 52% in the past 24 hours. This came after a dip into a zone of demand that AMBCrypto had reported as significant a couple of days ago.
However, the recent gains have brought the meme coin to a resistance zone from the 9th of December.
The price action of the past week suggested two possibilities for BONK. The strong upward momentum pointed toward the likelihood of a breakout past the local highs.
Yet, evidence from technical analysis suggested that bulls were not as strong as they appeared. Could we see all of the previous day’s gains wiped out soon?
The lower timeframe consolidation zone was defended firmly
Source: BONK/USDT on TradingView
The area marked in cyan represented a consolidation region on the four-hour chart that had been tested multiple times in the past few days. The most recent retest saw BONK bounce by close to 52% within a day.
However, the On-Balance Volume (OBV) formed a lower high compared to 9th December. This indicated that the recent buy was not spurred by genuine demand.
The RSI also dipped on the 12-hour chart to signal weakened bullish momentum.
A breakout past the $0.0000149 level and a retest would offer a buying opportunity targeting the 61.8% Fibonacci extension level at $0.0000219.
On the other hand, it was also possible that BONK would face rejection at $0.0000149 and fall to the the local lows at $0.00000995.
The increased Open Interest helped explain the surge in prices
Source: Coinglass
The OBV deals with the buying and selling volume per trading session in the spot market.
Meanwhile, the data from Coinglass showed that the increased Open Interest of the past 24 hours came alongside a rapid increase in prices.
Read Bonk’s [BONK] Price Prediction 2023-24
The inference was that the rally was not driven by buying pressure but by OI. Such a rally can last only a short while and is more likely to retrace.
Therefore, despite the strong bullish momentum, it was anticipated that BONK would descend toward $0.00000995 once more.