Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the opinion of the writer.
Bitcoin [BTC] fell below the $30k mark, and the $28.7k was a level of support that has held for nearly a month. Could Bitcoin be pushed lower, or will a reversal come into play? This would likely have an impact on ApeCoin [APE] in the hours to come.
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A bounce upward could give a decent entry to a short position on APE, but patience could be required. Despite the bearish structure of APE on the charts, a push toward the $5.8-$6 area can not yet be ruled out.
APE- 4-hour chart
The H4 chart shows a band of resistance (red box) that has consistently rejected the upward advances of APE over the past month. Therefore, it is likely that going forward, another rejection can be expected.
Fibonacci retracement and extension levels were plotted based on APE’s drop from $7.48 to $5.93 and showed the 23.6% and 61.8% extension levels to lie at $5.57 and $4.98. There is a long-term significant level of resistance at $5.95.
Over the next week, the $5.6-$6 could be revisited. However, it is a region of bearish dominion. Hence, a move lower could materialize once more.
APE- 1 hour chart
On the H1 chart, an upper candlewick to $5.57 emerged in recent hours but it signified the strong selling pressure, which forced the price to move to ward $5.3 at press time. Hence, in the next few hours, a move to $4.98 could be likely.
Thereafter, it remains uncertain. APE could continue to push lower, or, it could see a bounce back to the $5.6 mark in search of liquidity before heading lower once more. Hence, patience would be key here. A pullback to the $5.6 area on this downtrend could be used to enter a short position, while shorts in place can look to book profit at the $5 level.
The hourly Relative Strength Index (RSI) rose above the neutral 50 mark but appeared to be headed southward just as quickly. This formed a hidden bearish divergence as well and could be a signal that the downtrend is going to continue. Since this was an hourly chart, the divergence might not be as strong as on higher timeframes.
The Awesome Oscillator (AO) was also nearly at the zero line, and could crossover above the zero line in the coming hours. On the other hand, the OBV has been headed lower and lower, a clear sign of bearish pressure.
A revisit to the $5.6 area could offer a shorting opportunity, with the $5.6-$6 area being totally packed with resistance. To the south, the $4.98 and $4.4 levels can be used to take-profit on the shorts in the days to come.
At the same time, it has to be understood that APE has been quite volatile in the past, and a quick surge to $6 before new lows can not be discounted. Invalidation for this trade lies just above the $6.1 mark.
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