Virtuals Protocol [VIRTUAL] has observed a gradual decline in its value over the past three weeks. While the retracement experienced a week ago seemed beneficial, the breach of the 78.6% Fibonacci level at 2.67 on January 19 marked a significant setback for the market.
Subsequently, selling pressure has intensified, especially with the heightened volatility witnessed in the Bitcoin [BTC] market during the same period.
Despite a surge in BTC’s value, VIRTUAL failed to see substantial gains, leading to a cascading effect dragging Virtuals Protocol and other altcoins down.
Predicting Virtuals Price Trajectory Indicates Potential Bearish Phase
The Fibonacci retracement levels were calculated based on the token’s upward movement in December. Currently, VIRTUAL is hovering slightly above the 100% retracement mark.
The inability to sustain the 78.6% level has transformed the retracement into a downward trend, evident on the daily chart.
Market conditions have leaned towards a bearish trend, with the daily RSI dropping below the neutral 50 mark earlier this month, signaling the dominance of bears. This trend remains unchanged.
Of concern is the consistent downward trend in the OBV indicator, indicating a steady increase in selling pressure throughout January.
The H4 chart reinforces this bearish sentiment. The previously bullish price level at $2.4 from mid-January has been breached and is now anticipated to act as a resistance area.
Forecasts predict a sustained downward trend in Virtuals price over the next few days.
With the CMF below -0.05 and the breach of the bullish price level, a test of the $2 threshold is likely. Should this level be breached, it is highly probable that bears will drive prices towards the 23.6% retracement at $1.25.
Interestingly, this level coincides with a horizontal support level at $1.34.
Analysis from the liquidation heatmap suggests that the regions of $2.2 and $1.95-$1.85 could potentially trigger a bullish reversal. However, recent price movements indicate that $2.2 was surpassed, leading to further decline.
Given the current scenario, the bearish momentum is anticipated to persist in the upcoming days, potentially initiating a descent towards $1.85. The possibility of a reversal hinges on capital inflows and the overall BTC market sentiment.
With BTC valuations remaining below $100k, the short to medium-term outlook for Virtuals price indicates a strong bearish tendency.
Disclaimer: The views expressed are subjective and do not constitute financial, investment, or trading advice. They solely represent the writer’s perspective.