Yearn.finance (YFI) looks at $ 42,000 after five consecutive days of earnings before a correction. However, behind the declining outlook hides the lack of purchase volume combined with the risk of overbought.
The YFI price rose more than 47% to $ 41,970 in five days as traders turned away from “high-cap” cryptocurrencies like Bitcoin (BTC) and Ether (ETH) and looked for short-term opportunities in the altcoin market .
https://twitter.com/santimentfeed/status/1477876631263928324?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener
“DeFi’s assets are showing some good growth signals as we move into 2022. YFI, UNI and AAVE are all doing well so far. “
Yearn.finance is one of the projects that has benefited from capital migration as its value has increased by almost 47% and 41.50%, respectively, compared to BTC and ETH in just five days. Meanwhile, the core element of dealers’ interest in the YFI market is the buyback program.
YFI / ETH and YFI / BTC price chart daily frame after announcement of buyback | Source: TradingView
On December 16, Team Yearn.finance notification bought YFI for over $ 7.5 million in the open market at an average price of $ 26,651. They also revealed an additional $ 45 million in cash in their coffers that will be used for further buybacks.
Additionally, the Yearn.finance community suggested that the YFI Treasury use a portion of the buyback to reward owners who actively participate in the Yearn governance, which is currently in the voting phase.
YFI price rose more than 100% against the US dollar following the announcement of the buyback.
However, YFI’s trading volume has declined despite the rebound, showing that traders don’t really trust its upward move.
YFI / USD price chart with daily frame and price-volume divergence | Source: TradingView
Typically, a bearish divergence between value and volume leads to a correction or consolidation until confidence rises. As a result, there is a good chance that YFI will have to interrupt its ongoing rally as its Daily Relative Strength Index (RSI) also enters the overbought territory above 70, a sell signal.
Additionally, the recent rally has brought YFI close to the turning zone of $ 40,000, as shown by the Fibonacci retracement in the chart below.
Three day YFI / USD price chart with Fib entry and exit levels | Source: TradingView
In particular, the 0.618 Fib line near the $ 40,113 level capped YFI’s bullish intraday attempt. Those levels also halted the October-November rally, which subsequently pushed the YFI price to a 12-month low near $ 17,000.
However, if the bulls attempt to push YFI price significantly above the 0.618 Fib line, they can also take it out of a multi-month area limited by support at $ 25,500 and resistance at $ 40,000. In this scenario, the next upside target for YFI could be towards the 0.5 fib line around the $ 51,000 mark.
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