FLOW price plummeted 30% as it formed a bearish head and shoulders pattern
Yesterday the FLOW price fell sharply as traders threw their bullish bets on the recently bullish digital assets.
The FLOW / USDT pair was down as much as 15.22% in New York this morning, a sharp reversal since Wednesday when the pair closed at a one-month high of $ 16.99 with gains of 43.87%. However, it continued its upward momentum during the early Asia Pacific session, hitting $ 18.44 before correcting down nearly 30% at press time.
The FLOW sell-off was widespread and was synchronized with a major bearish correction in the crypto market. For example, Bitcoin, the top cryptocurrency that often affects juniors, fell more than 5% in 24 hours, while Ethereum fell more than 8% over the same period.
Top 10 performance in 24 hours. Source: Messari
After all, the crypto market fell by $ 52 billion in an adjusted 24-hour period.
FLOW forms a classic bearish pattern
Greater downside risk will occur in FLOW when a bearish bearish chart pattern emerges as the head and shoulders.
In particular, the head and shoulders are bearish reversal structures that appear as baselines – also called cutouts – with three points. The middle peak is higher than the other two peaks. Minor or lower vertices are the same height.
Traders typically execute their orders below the neckline by calculating a downward target based on the highest point of the head to the neckline. The distance is how far the price can move after breaking below the neckline.
FLOW head and shoulder setup (red above) with a downward facing target (purple below). Source: TradingView
So far, FLOW seems to have completed the pattern as shown in the graphic above. The cryptocurrency has formed a medium top (heads) above $ 18 and the other two tops (shoulders) within an approximate range. In the meantime, 14,522 US dollars act as a cleavage.
Price broke below support on slightly higher volume and continued to move lower during the US session. The profit target, according to the pattern’s technical description, will be around $ 11,567 based on the percentage gap between the head and the baseline (~ 20%).
The path of least resistance is also pointing down on the daily chart.
FLOW / USDT holds $ 13.6682 as a last line of defense as Relative Strength Index RSI shows signs of correction after closing in the overbought zone (70). If the sell-off continues due to market-wide downside pressure, the pair’s closest support levels will appear near the 50-day simple moving average (50-day SMA; blue wave) and daily moving averages – daily EMA; green Wave).
FLOW’s 50-day SMA is currently around $ 11.78 and its 20-day EMA is around $ 11.22. The downward target of the pattern is right in the middle of the mentioned moving averages.
Conversely, holding $ 13.6682 as support increases the potential for retesting $ 18.42 as resistance, if successfully crossed there will be a longer upward move towards the $ 22 range of 62-26.11 .
According to Cointelegraph