NOIDA (CoinChapter.com)— Arbitrum (ARB) prices fell victim to a textbook reaction following a token unlock. Moreover, ARB has more bearish cues lined up, which could lead to the token paring more gains in the coming days.
ARB price is moving inside a bearish technical pattern called the ‘descending triangle.’
The descending triangle is a bearish continuation setup with a falling resistance line that caps upside attempts and a flat support that prevents declines. The height of the triangle’s thickest section determines the price target in a descending triangle setup.
Bears are forcing ARB price to break out below the triangle pattern, though bulls are fighting back.
If the triangle pattern pans out, the ARB coin price could drop nearly 33% to reach the projected price target of nearly $1.02.
Whales Go To The Market
Following the March 16 token unlock, which spilled 1.11 billion ARB tokens into the market, recipients seemingly started booking profits.
A total of 11 whales deposited 34 million ARB tokens into exchanges, worth almost $58 million at the time. The $2.32 billion token unlock on March 16 released 673.5 million tokens for Arbitrum advisers and its team members. Moreover, the unlock event also released 438.25 million tokens for investors.
Often, token unlock events lead to increased bearish pressure for an asset, as early participants and investors are likely to start booking profits. Sometimes, a token’s community avoids dumping tokens all at once, but it seems ARB did not have a very loyal community.
Moreover, it might not be the end of the bearish pressure for Arbitrum, as the project has another token unlock scheduled for April 16. The upcoming event would release 92.65 million ARB tokens into the market.
Given the market’s response to the March token unlock, traders would be wary of holding onto their tokens in April.
Bulls Struggling Against ARB Token Unlock Bearish Pressure
Meanwhile, ARB bulls are struggling to arrest the token’s downtrend. Furthermore, the recent price action has caused ARB’s 20-day EMA (red wave) poised to move below its 50-day EMA (purple wave) trendline, forming a bearish pattern called the death cross.
Traders consider the pattern to represent a negative sentiment among market participants and, therefore, a sell signal. As such, ARB price risks a drop to the support near $1.42.
Moreover, breaching the immediate support level could force the token to test support near $1.24, its lowest level since Dec. 2023.
However, if bulls manage to consolidate near the current price level, ARB price could start a rally before the April token unlock. If it happens, ARB price could rise to the 0.618 FIB resistance near $1.7.
Breaking above the immediate resistance could help the Arbitrum token price rally to the resistance near $1.9 before retreating.
The relative strength index, an indicator that determines if an asset is overbought or oversold, currently shows ARB to be oversold with a score of 26.85 on the daily charts. Although a bullish cue, it will be difficult for bulls to capitalize on the cue given the massive selling pressure against the token.
