- Filecoin price shows a decline in bullish momentum as it consolidates inside an ascending parallel channel.
- A decisive close below the channel's lower trendline could trigger a 5-to-15% sell-off.
- A bullish scenario will come into play if FIL price manages to close above the channel's upper trendline.
Filecoin price rose 115% between February 8 and 10. Since then, FIL has been consolidating in an ascending parallel channel. The lack of momentum has caused the price to move sideways and signals a bearish breakdown shortly.
Filecoin price hints at a lower low
A reduction in bullish momentum combined with the recent sell-off has pushed Filecoin price to consolidate near the parallel channel's lower trendline.
The Parabolic Stop and Reverse (SAR) and the SuperTrend indicator have simultaneously flashed a sell signal on February 15.
Hence, a 4-hour candlestick close below the immediate support at $43 confirms the bearish thesis and indicates the start of a downtrend.
FIL/USDT 4-hour chart
Supporting Filecoin's dire outlook is the bearish divergence between the price and the on-chain volume. Bearish divergence is formed when the price forms a higher high while the volume drops.
In this case, FIL's on-chain volume has dropped approximately 12% to $3.20 billion between February 10 and 15, while the price saw a 12.5% increase. Hence, this on-chain metric suggests that FIL is primed for a correction.
Filecoin On-chain Volume chart
Although a shortage of social presence could be bullish from a counter-sentiment perspective, a complete absence could be interpreted as an investors' uninterest in Filecoin's prospects.
Therefore, a breakout from the parallel channel's lower trendline would likely take FIL towards the support barrier around $38, a confluence of the 50 four-hour moving average (MA) and the SuperTrend indicators' recent buy signal.
However, a continuation of selling pressure here would push FIL down by 10% towards $35.
Filecoin Social Volume v. Social Dominance chart
While things seem to be extremely bearish for Filecoin, an increase in buying momentum could push the price towards the ascending parallel channel's upper trendline at $53.
However, a 4-hour candlestick close above this resistance barrier would invalidate FIL's bearish thesis and push the coin towards the next supply barrier at $60.
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