IOTA: Should Traders Continue Short Selling Tokens in the Future?


IOTA’s movements over the past few months have clearly supported the bearish story. An extended correction from the September 2021 highs confirmed the end of the bullish cycle. The current bearish streak has led the alt to plunge from the $0.389 level to its multi-month baseline.

Giving considerable importance to the liquidity range, the altcoin still needed to cross the 23.6% hurdle to rekindle a strong bullish opportunity. At press time, IOTA was trading at $0.4372, up 1.81% in the last 24 hours.

iota daily chart

Source: TradingView, IOTA/USDT

IOTA saw a significant break in the upper trendline of the long-term downward channel (white). After barely being able to move above 20 EMA (red) and 50 EMA (turquoise), sellers steered the alt back on a trip southward while the market as a whole heightened its liquidation.

As a result, altcoins have lost more than 60% of their value in the last 40 days. IOTA can withstand the recent sell-off as buyers show some resolve to defend the 15-month baseline at the $0.38 level.

The $0.44 mark assumed a significant area determining the amount of potential reversal. A sustained close below this indicator would test the $0.38 baseline again. Conversely, any closing price above this mark will lead the alt into a lower liquidity range and thus increase the chances of further recovery.

rationale

Capture 22 scaled

Source: TradingView, IOTA/USDT

The Relative Strength Index clearly painted a bearish picture as it struggled to break the shackles of oversold lows. A retreat from the 34 line could confirm bearish divergence and delay the recovery phase.

Aroon up (yellow) has swept zero points in the last 5 days. Moving forward will encourage a tight position on the chart. Posting this will likely revive from this sign, exposing alt to short-term recovery.

conclusion

The gap between the 20 EMA and the 50 EMA has grown too large. Considering this figure and the oversold figure of the RSI, IOTA may stop selling now. The $0.44 mark will be a decisive level for further recovery or a squeeze phase with a baseline at the $0.38 level.

Finally, investors/traders should keep a close eye on Bitcoin movements that affect their overall perception of the market.

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