Key Takeaways
Eleven days ago, Filecoin’s (FIL) price crashed to an all-time low of $2.48. This came after the cryptocurrency’s value dropped by 50% on a year-to-date (YTD) basis.
But since that drop on March 11, the native of the decentralized storage network has increased by 23%. Currently, FIL’s price has broken above $3 again, indicating signs that the correction might be over.
However, indicators reveal that Filecoin might not yet be out of the woods. Here is why.
Filecoin Breakout Lacks Momentum
In December, Filecoin followed the broader altcoin rally and climbed above $8 for the first time since April 2024. A few months later, the price dropped below $3 and hit an all-time low.
Filecoin’s price formed a falling wedge amid these lower highs and lows. Historically, the falling wedge is a bearish to bullish reversal pattern backed by rising buying pressure.
Interestingly, FIL followed through with this bullish pattern, breaking above the upper trendline of the wedge to hit $3.06. Typically, the breakout drives an extended rally.
However, in FIL’s case, that might not happen. One reason for this bias is the Chaikin Money Flow (CMF).
The CMF measures the level of accumulation and distribution around a cryptocurrency. When the reading rises, it signifies buying pressure that could foreshadow a price increase.
However, as seen above, the CMF is trending downwards amid Filecoin’s price breakout. This position indicates a bearish divergence. Therefore, FIL is likely to fall back within the pattern it recently broke out from.
FIL Price Analysis: New Low Likely
Zooming into other indicators, CCN observed a decline in the Average Directional Index (ADX) reading. The ADX measures the directional strength of a trend.
When the ADX rises and exceeds 25, it indicates strong directional movement. On the other hand, if the ADX rating declines, it suggests weak directional movement.
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On the daily chart for FIL/USD, the ADX line (red) is currently at 25.42 but is trending downward. This trend suggests that Filecoin’s price might lose hold on the bullish movement, and a decline below $3 could be in the works.
Like the ADX, the Supertrend indicator also supports a downward reversal. Typically, if the green line of the Supertrend is below the price, it indicates a buy signal, suggesting that the price might trade higher.
However, Filecoin’s price is below the red line of the Supertrend, indicating overhead resistance near $3.55. If this remains the same, the altcoin’s value might experience a correction toward $2.44, potentially marking a new all-time low.
FIL must break through the resistance at $3.87 to invalidate this bearish thesis. If successful, the cryptocurrency might surge to $4.76 amid rising buying pressure.
The price might rise to $6.19 in a highly bullish market condition.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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