Leading decentralized storage protocol Filecoin (FIL) made an impressive rally of 75% over the weekend.
It marks the break of half a year of stifling price action for the once highly prized cloud-storage asset.
Filecoin is currently trading at $8.59 (+1.45% in the last 24 hours).
February 17th saw a major breakout from the consolidation price action that ranged between $5.00 – $5.50 for over a month.
As Friday evening approached, green smacking candles began to color across the charts. Riding higher on the back of Bitcoin (BTC)’s push to $24,500 last week.
The rally continued throughout the weekend until it dropped to just shy of $10 on Sunday.
This is a level not seen since August 2022 (more than 6 months ago). Recapturing the $10 mark is a key goal for FIL, which is down to single-digits, a fall from grace for the coin that once traded at $237.
Localized price action has turned bearish in the last 24 hours. As the bulls rush to gather support and consolidate fresh gains.
Indeed, consolidation is finding legs around $8 – a minor retracement of -10% from the local top.
With the price action clinging firmly to the top of the FIL’s trading channel, sentiment is looking bullish.
Can Filecoin (FIL) Rally Extend?
However, observing indicators challenge this theory.
The RSI peaked at 14 as it heated up during the weekend rally. Hitting the dreaded top of 85 – this was a clear overbought signal.
And the matter is not yet settled. The RSI has not cooled significantly despite the local retracement and supporting consolidation. Still sitting high at the current level of 76.
This is a clear bearish signal and may indicate a drop down to test the lower support trendline. The lower trend line hasn’t been tested in almost a whole week.
Filecoin’s MACD further strengthens this angle, with the indicator also showing bearish divergence. Local retracement has seen the MACD fall from a high of 0.162 over the weekend to -0.023.
Despite the bullish rally and the upside potential that Filecoin has historically displayed, local action indicates a potential for a breakdown to test further support.
From here, downside risks are not insignificant, with a downside retracement towards the lower support at $5.50. This would represent a downside move of -34.96%.
The upside potential if $10 can flip to support is not insignificant. $11.50 could be the next stop (+35.98%) with historical resistance levels from May 2022.
Overall, Filecoin’s short time frame (STF) risk:reward ratio sits at 1.03. With upside potential and downside risk roughly proportional – it’s a 50/50 toss-up. It may be worth waiting for a better entry.
Why is Filecoin (FIL) exploding?
Over the past two weeks, crypto markets have moved beyond the perception of the ‘Chinese crypto’ narrative.
Which has seen investors flock to ‘Chinese coins’ on the back of rising macro sentiment around regulatory easing for crypto in Hong Kong (VASP). and the CCP’s teasing of impending quantitative easing.
Indeed, massive liquidity injections by the People’s Bank of China have coincided with a boom in Chinese crypto projects.
As a result, popular crypto projects with Chinese development teams have proliferated. With Filecoin (FIL), Polkadot (DOT), and VeChain (VET) all posting impressive rallies over the weekend.
But this legend may be wrong.
Last week, the world’s largest video game company Tencent (Chinese) fired its entire Metaverse department, Only a few months after investing billions, 300 employees were laid off.
and this story is still serial crackdown Against crypto by Beijing. who has sought to follow two birds; one stone policy Against the crypto industry.
The new digital yuan, along with China’s bitcoin ban, both asserts the supremacy of the CBDC and eases pressure on a strained national power grid.
What is Filecoin (FIL)
filecoin (FIL) made headlines during the 2021 bull run as it soared to astonishing highs above $200.
This has cemented the project in the top 25 cryptos by market cap, currently ranking FIL as the 22nd largest cryptocurrency.
The decentralized protocol enables users to rent storage space on their personal devices. Built using open source coding, the goal here is to create a decentralized ‘cloud’ that can compete with heavily centralized data-centre players.
The Filecoin network consists of three major mechanisms – storage mining (offering storage), retrieval mining (processing data queries on the network), and clients who lease storage space.
Is now a good time to buy Filecoin?
While FIL is due for a substantial rally at some point in the future, it may not come for several months. So if you are looking for FIL as well as other high-potential crypto projects, we have reviewed the top 15 cryptocurrencies for 2023, as analyzed. crypto news Industry Talk Team.
The list is updated weekly with new altcoins and ICO projects.
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