Flow (FLOW) price analysis: Buy the dip?
Flow may correct in the short term
FLOW, the token of the Flow blockchain, has risen about 170% from its 18 June intraday low of $1.17. After the stupendous rally, traders seem to be taking profits near the overhead resistance at $3.10 as of 9 August 2022.
The latest leg of the rally was triggered following an announcement from Meta on 4 August that it was rolling out digital collectibles to 100 more countries and adding support for non-fungible tokens (NFTs) created on the Flow blockchain.
FLOW responded with a 41% rally to this announcement, which was followed by a sharp increase in the open interest across several crypto exchanges, according to CoinGlass data cited by CoinDesk.
The integration with Instagram is likely to increase the adoption of the Flow blockchain and in turn boost demand for the FLOW token.
In other positive news, Flow announced on 20 July that users could transfer USDC from Ethereum to the Flow blockchain through the Teleport bridge.
This would be helpful to users who want to transfer funds from Ethereum to purchase NFTs on the Flow blockchain.
Could lower levels attract buying from investors who may have missed the first leg of the rally? Could FLOW go up? Read the FLOW price analysis to find out what the charts suggest.
Flow technical analysis: Weekly chart
FLOW’s price has been in a strong downtrend for several months. The FLOW/USD pair dropped from an all-time high of $46.16 on 5 April 2021 to an all-time low of $1.17 on 18 June 2022, according to CoinMarketCap.
This sharp decline of more than 97% sent the relative strength index (RSI) deep into the oversold territory, indicating that the selling may have been overdone. Aided by favourable news, the pair started a recovery, which pushed the RSI close to the 40 levels.
The up-move could reach the 38.2% Fibonacci retracement level of $3.84 where the bears may pose a strong challenge. If the bulls do not give up much ground from this level, it will increase the possibility of the continuation of the up-move.
The pair could then rise to the 50% retracement level of $4.68 and later to the 61.8% retracement level of $5.51.
Flow technical analysis: Daily chart
FLOW’s price has formed a rounding bottom pattern that will complete on a break and close above the overhead resistance of $3.10. If that happens, the pair will signal a potential trend change.
The pair could then start an up-move toward the pattern target of $5.03. The bears are expected to defend the level aggressively.
The sharp rally of the past few days has pushed the RSI into the overbought zone, suggesting a minor correction or consolidation in the near term.
On the downside, the first support is at $2.50 and then $2. If the price turns up from either level, it will suggest that the sentiment has turned positive and traders are buying on dips. That will increase the likelihood of the resumption of the up-move.
The bullish momentum will weaken on a break below $2 and that could open the doors for a drop to $1.40.
Flow: Buy or sell at current levels?
Flow is facing profit-booking near the overhead resistance at $3.10. The FLOW/USD pair could decline to $2.50 and then to $2. A strong bounce off this level could increase the likelihood of the resumption of the up-move. Flow’s price analysis suggests that a break and close above $3.10 could open the doors for a possible rally to $5.03.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.