Following its peak in early March, NEAR Protocol [NEAR] has been on a bearish trajectory, consistently moving within a descending channel and struggling to maintain crucial support levels.
Investors are now pondering whether a recovery is looming on the horizon or if further downside movement is inevitable.
Currently, NEAR is trading at $3.663, edging closer to the critical support area of $3.5. A failure of the bulls to intervene at this level could potentially trigger increased selling pressure.
Pressure Persists from Bears
The price action of NEAR has adhered to the confines of a descending channel, a clear sign of a bearish trend.
This trend has driven the token towards its lowest levels in six months, with the bulls encountering difficulties in surmounting key resistance levels.
The 20 EMA ($4.1) and the 50 EMA ($4.47) are both on a downward slope, indicating a prevailing short-to-mid-term bearish sentiment.
A significant barrier lies at the 200-day EMA ($4.99), historically serving as a dynamic resistance point.
A breach of the $3.5 support level could propel the price towards the critical $2.6 level, potentially triggering further selling activities.
Additionally, the MACD histogram has dipped below the zero line, suggesting a surge in selling pressure. The recent bearish crossover between the MACD and signal lines further reinforces the bearish scenario.
An upward crossover above the signal line could alleviate the bulls’ situation, although increased buying volume is necessary for confirmation.
Simultaneously, the Awesome Oscillator (AO) indicates negative momentum, underscoring the current bearish control.
Derivative Data Indicates
Recent derivatives data support the prevailing bearish sentiment. NEAR’s trading volume rose by 8.96%, totaling $277.62M, while Open Interest decreased by 5.26%, reaching $120.94M.
The decline in Open Interest indicates traders closing their positions, hinting at a potential continuation of the bearish trend.
The long/short ratio on Binance stands at 2.202, with more traders leaning towards long positions.
However, this imbalance does not inherently suggest bullish momentum, as long traders may find themselves trapped in a bear market if crucial support levels are breached.
Given the descending channel and bearish EMA positions, NEAR’s bulls face a challenging ordeal. A breach beneath $3.5 could unleash further downsides, with $2.6 as the next critical support level.
Conversely, a breakout above the upper boundary of the descending channel could pave the way for a retest of the $6.2 resistance level, contingent upon improved broader market conditions.
For now, NEAR’s short-term outlook appears dim. Traders should closely monitor Bitcoin’s movements, as they could substantially impact NEAR’s trajectory.
Disclaimer: The views expressed do not constitute financial, investment, trading, or any other form of advice and are purely the opinion of the author.