Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author
- NEAR was up at press time.
- But a key technical indicator was showing a widening divergence at press time.
NEAR protocol [NEAR] more than doubled in value after the January rally. It jumped from $1,247 to $2,721, but later fluctuated. At press time, NEAR was valued at $2,501, but was increasingly facing a potential correction due to divergence from a technical indicator.
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NEAR’s Rising RSI Divergence Is A Possible Correction?
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The daily chart showed a bullish NEAR ahead of a successful rally in January, but faced price rejection at the $2,721 resistance level. However, the price rally was opposed by the Relative Strength Index (RSI).
The RSI has been trending down since mid-January – a divergence with prices that could indicate a possible correction in the coming days.
Based on the height of the recent price consolidation range of $2,323 and $2,721, the correction could target the support level at the 50% Fib level of $1,984.
But the decline could also be contained by the 100-day EMA, or the 61.8% Fib level. These could act as short selling targets if the correction occurs.
However, the above bias will be canceled if the bulls break above the 100% Fib level of $2.721. Such a rise would allow the bulls to retest the October support level of $2,771 or the November high of $3,342.
NEAR experienced fluctuating OI and declining active users
According to Coinglass data, NEAR’s fluctuating open interest (OI) rates undermined a strong uptrend rally. At press time, NEAR’s OI had fallen sharply but leveled off, indicating a possible change in momentum that could support NEAR’s uptrend.
However, a prolonged decline in OI could undermine further upside as more money is taken out of the NEAR futures market.
On the other hand, NEAR’s daily active users and trading volume have decreased since mid-January. The trend shows that fewer accounts were trading NEAR, which could undermine the buying pressure needed for a strong uptrend.
As a result, bears could be prompted to undervalue NEAR and put it in a correction.