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Cryptocurrency News Articles
Sui (SUI) Price Analysis: Overbought Status and Bearish Divergence Signal Potential Selling Opportunity
Oct 13, 2024 at 09:02 pm
The Sui Network (SUI) has escalated the cryptocurrency market ranks at an impressive speed and price performance amid growing demand
The Sui Network (SUI) token has seen impressive price performance and rising demand in the cryptocurrency market. However, this rapid ascent has also triggered several technical indicators that may be signaling a potential selling opportunity.
According to Finbold’s analysis of data from CoinGlass’s RSI heatmap on October 13, SUI is the only cryptocurrency that is displaying an overbought status on a weekly timeframe.
The Relative Strength Index (RSI) is a momentum oscillator that measures the magnitude of recent price changes to evaluate whether an asset is overbought or oversold. An RSI value above 70 is typically considered overbought.
Specifically, SUI’s RSI marks 73.43, 74.7, 71.65, 73.84, and 72.68 at the 1-hour, 4-hour, 12-hour, 24-hour, and 1-week time frames, respectively.
This overbought status across multiple time frames suggests that SUI’s price may be due for a correction, especially considering the diminishing returns on the RSI over the last seven days.
Furthermore, a closer examination of SUI’s daily price chart, as indicated by TradingView’s crypto index, reveals a similar indication of an overbought SUI.
The daily RSI marks 72.07 in this index at $2.21, retracing after reaching a $2.29 all-time high.
Notably, the chart also displays a bearish divergence starting on September 24, which could suggest a reversal from this rally. The bearish divergence appears with SUI’s price making three subsequent higher highs while the RSI makes three subsequent lower highs.
We also spotted this pattern in the weekly and 4-hour chart against the dollar.
Overbought SUI price analysis and bearish divergence
Interestingly, a reversal here is expected according to multiple other indicators and analysts. Finbold, for example, reported a Sui price prediction by the reputable trader, pejman_zwin, on TradingView, using the Elliott Wave theory.
“Currently, SUI is moving near the Resistance lines and the Potential Reversal Zone. According to the theory of Elliot waves, SUI seems to be completing the main wave 3. (It is completing the microwave 5 of the main wave 3). I expect SUI to rise another +20% or so and then start to correct. SUI correction can be -20% to -40%.”
– pejman_zwin
The forecasted 20% rise is already completed, previously targeting $2.30 per token. Now, if the analysis plays out as expected, SUI could be heading to a -20% to -40% correction wave four.
Sui Network fundamental analysis
Meanwhile, the Sui Network gained the spotlight due to its solid technology stack and distinguished user experience. Many cryptocurrency investors and users have deemed SUI the Solana (SOL) killer, resulting in a capital inflow to the project.
Recently, Circle deployed its dollar stablecoin USDC natively on the Sui Network, bringing relevant liquidity to the ecosystem. A day later, Grayscale announced the Grayscale SUI trust, opening doors for institutional exposure to the token.
SUI tokenomics raises concerns
On the other hand, SUI’s tokenomics raises concerns, given a highly weighted distribution to private investors and Mysten Labs.
With less than 30% of all already distributed tokens in circulation, Sui has a high fully diluted value (FDV), most of which is being staked while still locked, increasing the asymmetry against retail traders and investors.
Finbold reported October’s $100 million monthly unlock of SUI tokens, illustrating the expected selling pressure at such profit levels. Series A and B investors received the largest unlocked share, totaling 61%.
In conclusion, while Sui’s technology, user experience, and adoption news sets the path for a bullish long term, its tokenomics and an overbought status, together with a spotted bearish divergences foreshadow an impeding correction and short-term weakening for SUI’s price.
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