Yearn.Finance (YFI) has been consolidating in its current range since June. A move outside of it is needed to determine the direction of the trend.
YFI has been declining since hitting an all-time high of $95,000 on May 12. The downward move led to a low of $17,700 on December 4, but it has since risen.
Currently, YFI is trading in the middle of its $27,500-$43,000 range. While the December 4th low caused a deviation below the support zone of this range, it recovered the level in what is a very bullish development.
However, despite the rebound, YFI is still 64% below its all-time high.
Short term YFI movement
Trader in cryptocurrency @AltcoinSherpa tweeted a YFI chart, stating that it potentially created a double top pattern.
Since the tweet, YFI has made a double top, which is normally considered a bearish pattern. On top of that, both tops were made with long top strands, a sign of growing sales pressure.
However, technical indicators remain relatively bullish. The MACD, which is created by the short-term and long-term moving averages (MA), is positive. This means that the short-term MA is faster than the long-term average, a common trait of uptrends.
Similarly, the RSI is just above 50. The RSI is a momentum indicator and readings above 50 are normally considered bullish.
While the lack of acceleration in these indicators suggests that the YFI trend has lost some of its strength, the readings indicate that the trend is still bullish.
The rise since Dec. 4 (highlighted) appears to have taken the form of a five-wave upward move. If true, YFI fixes now.
The main support area would be found at $27,200, created by the 0.618 Fib retracement support level. This also coincides with the bottom of the long-term trading range.
Therefore, the most likely scenario would see YFI rebound at this level and attempt to move towards the top of the range again.
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