Arbitrum (ARB) broke through the downward resistance line, but failed to develop growth. Now the token could make a bearish break of the long-term structure, which would trigger a sharp drop to $1.0.
The token could now make a bearish break of the long-term structure, which would trigger a sharp drop to $1.0.
Arbitrum failed to develop a bullish breakout
The Arbitrum project token, which is a Level 2 (L2) blockchain, hit a low of $1.30 on April 24, but has since started rising.
Technical analysis showed that on the same day the ARB broke the downside resistance line, and two days later it made a high at $1.50.
This resistance line was present on the chart during the week, so its breakdown can provoke a significant strengthening of the price and confirm the end of the correction.
However, the ARB never took the horizontal resistance area of $1.50 (red sign).
If the decline continues, the next closest support will come into play at $1.17. This will mean that the market has gone below the bullish breakout level.
In the meantime, the wave analysis of the 12-hour timeframe reflects a more bearish picture for the coin.
The main argument in favor of this scenario is the presence of an ascending parallel channel on the chart.
This pattern is considered a corrective pattern, so the northward direction implies that the broader trend of the currency is bearish and the price will eventually break out of this channel and head south..
In addition, the ARB is trading in the lower part of this channel, which further increases the probability of a bearish breakout.
The catalyst for a potential decline could be the support area of $1.30. This is not only channel support, but also an important Fibo level of 0.382 retracement (white).
Fibonacci levels are traditionally thought of as the most likely placeholders for price stops after a significant advance in one direction.
Fibonacci levels are traditionally regarded as the most likely springboards for stopping and reversing prices after a significant advance in any one direction.
It is expected that at those levels, the market might regain some of the distance covered and only then resume the move in the original direction.
Hence, a break-down of such an important area can trigger a sharp fall of the ARB towards $1.. Meanwhile, a break above $1.50 will aim the bulls at the historical high of $1.80.
A growth and closing above the channel’s median line would cancel the current bearish forecast and might cause ARB to rise towards $1.95, which would be a new all-time high.
The rally and closing above the channel’s median line would cancel the current bearish forecast and might cause ARB to rise towards $1.95, which would be a new all-time high.
As BeInCrypto’s editorial staff told earlier, Arbitrum has overtaken the bitcoin network in terms of transaction fees.