Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Bullish defense of critical support level could cave to intense selling pressure.
- Sellers dominated open positions in the derivatives market.
Bitcoin’s [BTC] bullishness over the past day had little effect on Arbitrum [ARB], as it remained stuck just above the critical $0.919 support level.
Realistic or not, here’s ARB’s market cap in BTC terms
With the price stuck in a compact range between $0.919 to $1.10, it seems like a matter of time before the bullish defense of the support level caves to the intense selling pressure.
Heavy presence of sellers prevented bullish rebound
A look southward showed the strength of bulls on ARB’s price chart at the $0.919 support level. Bulls had rallied strongly from the level in June to reach a Q2 high of $1.34.
The descent of price to the level on 17 August was expected to have the same effect, as it was the first re-test of the level since the bullish rally. However, bulls failed to push on this time with sellers continuing to shell the support level.
The intense selling pressure was echoed by the Relative Strength Index (RSI) which has been at the edge of the oversold zone for over a week. Even though the Chaikin Money Flow (CMF) saw a push toward the zero mark, it still remained in the negative area. This highlighted the cautious approach to new inflows by investors.
A break below the current support level will lead to a new price low for Arbitrum with sellers targeting the $0.6 to $0.7 price zones. Alternatively, if the bullish defense of the support level holds, ARB could rally again to the heights of $1.1 to $1.3.
Longs repelled in the futures market
The bearish weight on the price chart extended to the derivatives market. According to liquidation data from Coinglass, longs suffered 77.3% of liquidations over the past 12 hours. Furthermore, this amounted to $94.67k worth of closed buy positions.
How much are 1,10,100 ARBs worth today?
Similarly, shorts held a significant ratio of the open contracts on the exchange long/short ratio. Sellers accounted for 55.6% of all open contracts over the past 12 hours. Furthermore, the sentiment on Arbitrum remained bearish. This could lead to a break of the bullish support structure over the coming days.