Bitcoin successfully regained the $19,000 price level after bulls have shown their strength. We now have a stable environment in which blue chips like YFI can push forward and reach ATHs.
But is that the case? Technical analysis shows that the leading DeFi cryptocurrency is in an incredibly bearish spot. If certain support levels do not hold, the token may even reach a previous low at ~$8,000.
Cryptocurrencies have moved a lot since the start of December. With an incredibly volatile market that led many to believe that the market may face a large correction, up to 30%, most investors were bearish. But now that we are back to the old highs from the end of November, will blue chips like YFI enter new price levels higher than ever before?
Up until yesterday, YFI behaved perfectly but has turned bearish since that moment. On higher timeframes (4HR), we saw confluence at $22,486 as both a strong support level and a Fibonacci line has held the price from further downfall. After pumping for two days since December 11, Yearn’s bullish nature may finally stop.
Yearn Finance’s future is not that great
On the chart above, we have a diagonal trendline stretching all the way from November 5 at $7,683 to December 13 at 27,366. Since its inception, market participants have respected the trendline at absolutely every moment. However, the line is a double-edged sword as it acts both as support and resistance. Yesterday, YFI was denied at $27,000 and has failed to reclaim the 0.236 fibline as support.
To confirm a new bullish trend, we need to see confluence at $22,588. This price level is protected by both an HTF trendline and a Fibonacci level, both of which were respected so far. If YFI bounces at that price, it may retest the diagonal line again and reclaim it as support. If not, the blue-chip may fall through and completely lose contact with the trendline.
In that case, investors would preferably bid at $19,467 as it is the next fib level. But considering that it is a 0.5 fib level it may not hold as effectively. In that case, the 0.618 fib level at 16,792 would make more sense from a bullish perspective.
RSI shows Bearish divergence on YFI
Apart from trendlines and Fibonacci levels, the RSI indicator confirms the same bearish story for YFI as well. On higher timeframes, we have a standard bearish divergence. While the price has increased so far, RSI has constantly decreased and failed to get past a trendline ranging from 84 to 58. Traditional TA practices note that this kind of behavior is extremely bad for investors.
Unless bulls show their strength in the next couple of days, Yearn Finance’s YFI will have an incredibly tough time. Not only is it battling a range established on November 18, but the token has also made a lower higher compared to the September ATH. If we exit this range, we would surely head towards the previously tested support at $7,608.
As Defiye reported earlier, Yearn Finance made great progress in establishing itself as the dominant player in DeFi. With numerous mergers launched in November, news and announcements have pushed the price of not only YFI but of its partners as well. Now that the wave of news has stopped, there is nothing fundamentally bullish that can affect prices in a positive way. With these factors in mind, YFI might have a not so great end of the year.