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Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Demand behind BONK has fallen despite the short-term rally.
- The possibility of range building was there and BONK’s response to local resistance would be enlightening.
Bonk [BONK] prices have increased by 52% in the last 24 hours. This came after a dip in a demand zone that AMBCrypto had reported as significant a few days ago.
However, the recent gains have taken the meme coin into a resistance zone as of December 9.
Last week’s price action suggested two possibilities for BONK. The strong upward momentum indicated the likelihood of a breakout beyond local highs.
Yet evidence from technical analysis suggested that bulls were not as strong as they seemed. Could we see all the gains from the previous day wiped out soon?
The consolidation zone in the lower time frame was strongly defended
Source: BONK/USDT on TradingView
The area highlighted in cyan represented a consolidation area on the four-hour chart that had been tested several times in recent days. In the most recent retest, BONK rose almost 52% in a day.
However, On-Balance Volume (OBV) reached a lower high compared to December 9. This indicated that the recent purchase was not driven by real demand.
The RSI also fell on the 12-hour chart, indicating weakened bullish momentum.
A breakout past the $0.0000149 level and a retest would provide a buying opportunity targeting the 61.8% Fibonacci extension level at $0.0000219.
On the other hand, it was also possible that BONK would be rejected at $0.0000149 and fall to the local low at $0.00000995.
The increased Open Interest helped explain the price increase
Source: Mint glass
The OBV deals with the buying and selling volume per trading session on the spot market.
Meanwhile, Coinglass data showed that increased Open Interest over the past 24 hours was accompanied by a rapid price increase.
Read Bonk’s [BONK] Price forecast 2023-24
The conclusion was that the rally was not caused by buying pressure, but by OI. Such a rally can only last a short time and is more likely to be repeated.
Therefore, despite the strong bullish momentum, BONK was expected to drop again towards $0.00000995.