Sonic formed a range within a range, and its approach of the local lows presented an opportunity.
- Sonic has posted respectable gains since April, challenging the $0.34 resistance again Altcoin saw its third rejection from the same resistance in May
Sonic [S], at the time of writing, appeared to be trading within a range. This range has been in play since February. When Bitcoin [BTC] hit the $75k-mark, the Sonic token dipped to its low at $0.182. Following Bitcoin‘s rally to new highs, S has climbed to challenge the range high at $0.347.
So, Sonic rallied by 90% while BTC only rallied by 46%. From a percentage gain standpoint, it appeared bullish.
That is not the case when we compare the vastly different market caps of the two tokens though. The $1.26 billion mcap altcoin should theoretically have an easier time posting gains during bullish market phases, compared to the $2.12 trillion asset.
And yet, the 4-month range of S was still unbroken at press time.
Should you buy more Sonic now?
Source: SONIC/USDT on TradingView
The OBV has been on a steady uptrend since April. Despite the repeated rejections at the $0.34 resistance, the OBV continued to make higher highs and higher lows. This may be a sign of sustained demand for S, although the price action was stuck within a range.
Over the past month, a range within a range has likely formed. This extended from the mid-range level at $0.265 to the range high. The 18% dip over the last 8 days meant the 1-day RSI fell below neutral 50.
This momentum would likely see S drop to $0.26-$0.265 level again.
Source: Coinglass
The 1-month liquidation heatmap revealed that the $0.27-level is an area of interest for Sonic traders. The liquidity around this area would likely pull prices lower. Therefore, swing traders can seek to buy Sonic around the $0.265-level, expecting a bullish reversal.
A price drop below $0.26 would be the first sign of bearish dominance. A sustained fall below $0.25 would necessitate these long traders to close their positions and prepare for a move towards the range lows.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
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