Analyzing the Potential Drop to $0.134 for MOODENG Due to ‘Double Top’ Pattern
MOODENG, a meme-inspired token built on the Solana blockchain, has experienced a 7% decrease in value over the past 24 hours, currently trading at $0.256. Within the last week, MOODENG has seen a significant decline of more than 35%.
The downturn in MOODENG’s price aligns with the overall market correction, resulting in over $1.5 billion in liquidations within a short period, according to Coinglass.
This decline has been attributed to the hawkish statements made by Federal Reserve officials during the recent Federal Open Market Committee meeting.
Given the persistence of these bearish trends, investors are left wondering about the potential for MOODENG’s recovery.
Identification of Bearish Signals
An analysis of MOODENG’s one-day chart reveals the emergence of a double-top pattern, indicating the likelihood of further bearish movements in the future. The token breached a significant support level at $0.341, signaling a sell-off and driving prices lower.
With the ongoing downward momentum, MOODENG could potentially fall towards a critical support level at $0.134. Should this level hold, it might attract buyers looking for an opportunity to initiate a price rebound. Conversely, a breach below this support could result in further declines.
Key technical indicators, such as the Chaikin Money Flow (CMF), suggest an increase in selling pressure, as evidenced by lower lows. The Directional Movement Index (DMI) reinforces the prevailing bearish sentiment, with the positive Directional Indicator (DI) crossing below the negative DI.
Despite these indicators, the Average Directional Index (ADX) points towards a possible weakening of the bearish trends, potentially paving the way for a period of consolidation for MOODENG. In the event that buyers re-enter the market, a reversal towards bullish territory could materialize.
Insights from Open Interest and Market Sentiment
MOODENG’s Open Interest (OI) surged to $304 million during mid-November when prices reached an all-time high of $0.69. However, current OI figures stand at $94 million, signaling a decline as derivative traders close their positions and exit the market.
This decrease in OI not only reflects a bearish sentiment but may also lead to reduced price volatility, potentially resulting in a period of range-bound trading for MOODENG.
Market Dynamics: Short Sellers in Control
The Long/Short Ratio for MOODENG has dropped to 0.89, indicating a prevalence of short sellers over long buyers. This imbalance suggests a bearish outlook, with many traders anticipating further price declines.
In the event of a sudden influx of short positions, a short squeeze scenario could emerge if MOODENG experiences an unexpected uptick in price. Such a situation would trigger a rush to cover short positions, leading to increased buying pressure and a possible price surge.