Why another freefall in Binance Coin price will not come as a surprise


  • Binance Coin price deals with choppy market forces before bleeding continues.
  • With a bearish rectangle pattern on the daily chart taking shape, BNB price could retest the $226 level.
  • Investors (whales) will keep off BNB until the stubborn selling pressure is shed.

Binance Coin price may have eased off the selling pressure after bouncing off support at $260, but investors seem skeptical that this will translate into an uptrend. Its technical outlook appears shaky, forecasting another correction to $226.

These factors could drive Binance Coin price to $226

The supply held by addresses between 10,000 and 100,000 increased from 3.14% in July, topping 3.33% in mid-August before falling to 3.21%. BNB’s run-up to highs near $300 was backed by an increase in supply held by the cohort to 3.33%.

However, with the chart below on a negative gradient, the near-term future for Binance Coin price remains bleak. In other words, as whales shun the token, selling pressure mounts – thus increasing the chances of an extended downtrend.

Binance Coin Supply Distribution

Binance Coin Supply Distribution

The BNB price technical outlook has not improved after the freefall from highs close to $300. A rectangle pattern on the daily chart confirms an untradeable choppy market.

BNB/USD daily chart

BNB/USD daily chart

A bearish rectangle comes into play in the midst of a downtrend as is the case with Binance Coin, given the move that preceded its formation was a down-leg from the August peak. Sellers often recapture the asset after taking a breather, hence the foreshadowed move lower. Normally the length of the breakout equals the height of the rectangle extrapolated lower forecasting a drop to $226. To short BNB, traders must wait for a confirmed move below the rectangle baseline before activating their orders.

Adding credence to the possibility of another leg down to $226 is the Directional Movement Index (DMI). A sell signal will surface as the 12-day EMA (Exponential Moving Average), orange, flips below the 26-day EMA, blue.

On the other hand, Binance Coin price will temporarily avoid the 13.17% bearish move below the breakout point if bulls manage to push above the 100-day SMA (Simple Moving Average), blue, at $278 and the 50-day SMA, red, holding at $281.

A breakout to the upside cannot be ruled out. Stubbornly bullish investors could consider $300 at the rectangle ceiling or $320 at the August highs as take-profit positions.

 


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