- Virtuals Protocol has a strongly bullish outlook after its rally from the $0.42 lows in April.
- A bearish divergence meant that a short-term price dip was possible.
Virtuals Protocol [VIRTUAL] has rallied 155% in a week on the back of heavy demand. The price has smashed past local resistance levels, and more gains appear likely.
The transaction count on the network also saw an uptick, which could encourage investors further.
VIRTUAL to see a minor price dip
Source: VIRTUAL/USDT on TradingView
The VIRTUAL bullish market structure shift occurred on Friday, the 25th of April. Since then, the token has rallied an additional 56%.
The Money Flow Index was at 89 to show strong bullish conditions, but has not yet formed a bearish divergence on this timeframe.
The CMF’s reading of +0.18 implied sizeable capital inflows to the Virtuals Protocol market. The A/D indicator has slowly trended higher in April to reflect increased buying pressure.
The downtrend from January to March made a series of lower highs on the 1-day chart. These levels were marked as the next potential resistance levels.
The rally of the past few days saw VIRTUAL sail past the $1.21 and $1.41 levels.
Source: VIRTUAL/USDT on TradingView
However, the 4-hour chart showed that this momentum might be due for a reset. The MFI has formed lower highs, while the price made higher highs (marked in red) over the past two days.
This was a bearish divergence and signaled a VIRTUAL pullback was likely. This pullback could see prices fall to the $1.22 or $1.06 support levels.
The other technical indicators on the 4-hour chart showed bullishness remained prevalent. The A/D and CMF indicators showed that buying pressure was still strong.
This was a clue that a pullback would be shallow, and a recovery would be quick.
Source: Coinglass
The 3-month liquidation heatmap underlined the $1.55-$1.58 as the next key magnetic zone.
Since liquidity attracts prices, the presence of large liquidations overhead would likely see VIRTUAL push higher before facing rejection.
Hence, traders should not immediately short the token after seeing the bearish divergence on the MFI. To the south, the $1.36 level was another notable liquidity pocket.
In the coming days, this area could be tested before the uptrend continues.
For long-term investors, the $1.6 level’s flip to support would present a good buying opportunity. For these holders, the next significant resistance level would be at $2 and $2.4.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion