The Mirror Protocol (MIR) is showing early signs of bottoming out after rising 30% in 48 hours
Mirror Protocol, a DeFi protocol built on top of the Terra blockchain, has been one of the most bullish over the past 48 hours, largely as its native token MIR is up more than 30% to $1.52, its highest level all time on January 22nd .
4 hour frame MIR/USD price chart | Source: TradingView
Has the Mirror Protocol bottomed out yet?
MIR price is rising despite the lack of specific fundamentals, a fairly common sight in crypto assets.
Therefore, the Mirror Protocol rally could be purely technical, especially after falling more than 90% from its all-time high (ATH) near $13 in May 2021, causing it to become overextended.
IncomeSharks, an independent market analyst, called the MIR’s recovery “a breeze,” noting that the multi-month decline has prompted bulls to “tighten their stops,” a strategy traders use to limit losses , when the price falls below a certain price target.
But the Mirror Protocol could still bottom, IncomeSharks added, citing balanced trading volume (OBV).
In particular, OBV measures the buying and selling power in the market. When the volume goes faster on the up days than on the down days, the OBV value increases and vice versa. Essentially, when OBV increases, purchasing power increases and when OBV decreases, selling pressure increases. The rationale behind OBV is that volume comes before price.
“High volume green candles near bottom, supertrend reverses as OBV breaks out and shows strength,” IncomeSharks tweeted Wednesday (February 16).
4 hour frame MIR/USD price chart have OBV | Source: IncomeSharks, TradingView
Raised floor pattern
Many signs of a prolonged recovery in the Mirror Protocol market come from a bullish reversal pattern.
Specifically, the MIR appears to have formed a double bottom, a technical setup that occurs at the end of a downtrend and signals that the bears that have been controlling the market are losing momentum.
Notably, the pattern looks like a “W” shape due to its two lows and the change in direction from downtrend to uptrend.
Daily frame MIR/USD price chart with double bottom setup | Source: TradingView
The basic premise of the double bottom pattern is that a successful break above its upper trendline tends to propel the price higher, which is the maximum distance between the upper and lower levels. Therefore, applying the same definition to a double bottom of the MIR would yield $1.73 as a bullish target.
Also, the daily Relative Strength Index (RSI) of the MIR shows that it has entered neutral territory around 54.
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