Following a week of strong gains amounting to 17.12%, Near Protocol [NEAR] has begun to lose its upward momentum. The asset’s price has been gradually decreasing, showing a minimal increase of only 0.18% in the last 24 hours.
Considering the prevailing market sentiment, NEAR seems poised to reverse its recent marginal upticks, signaling a shift towards a more bearish outlook.
Possible Price Decline Ahead?
The number of active addresses on Near Protocol has seen a notable drop, indicating a lack of interest which could potentially negatively impact the price.
The active addresses have fallen from 4.2 million on January 1st to 3.2 million currently, according to Artemis.
This decline implies reduced participation in token transactions or Protocol interactions, which might further push NEAR prices downward.
Analyzing the price action on the charts, CryptoCrypto identified signs pointing towards a probable downtrend.
Downward Pressure from Supply Zone on NEAR
On the 4-hour chart, NEAR seems vulnerable as it entered a supply zone ranging between $6.154 and $6.311.
A supply zone is a region with concentrated sell orders, often resulting in a price decline once reached.
The Fibonacci retracement tool indicates a potential price drop for the asset, possibly falling as low as $4.870 if selling pressure increases.
However, key support levels are identified on the chart at $5.712, $5.551, $5.390, and $5.161, where price rebounds could occur.
Further examination of technical indicators suggests a bearish perspective for NEAR investors.
Confirmation of Bearish Trend
The Average Directional Index (ADX) on the chart indicates strong bearish sentiment, with the ADX line sharply rising to 42.19 currently.
ADX serves as a technical indicator to measure market trend strength, with an upward ADX movement indicating a robust trend and a downward movement signifying a weaker trend.
The formation of a death cross, where the signal line (orange) crosses above the blue MACD line, further validates this bearish signal. Presently, the orange line stands at 0.135, while the blue line is at 0.128.
Typically, a death cross precedes a price decline and the appearance of red histogram bars, both visible on the chart.
If the ADX line continues its upward trajectory and the signal line remains above the MACD line, the asset price is likely to continue its descent.