Binance Coin Risks Bull Exhaustion as Price Explodes 45% WTD

  • A combination of fundamental and technical factors helped push Binance Coin (BNB) to its record high on Thursday.
  • The setup remains in favor of bulls as BNB eyes levels above $200 as its primary upside target.
  • Meanwhile, bulls remain at risk of upside exhaustion as the rally overheats beyond neutral levels.

Binance Coin (BNB) coughed out record levels in its price boom on Thursday, driven upward by the continuing rally in the Bitcoin market.

The cost to purchase one BNB token hit $197.46 during the European trading session, according to Binance data. It was trading around $198.14 as of 1511 GMT.

Binance Coin, BNB, BNBUSD, BNBBTC, cryptocurrency
Binance Coin eyes a close above $200 to confirm its breakout trend. Source: BNBUSD on TradingView.com

Binance Coin has seen about 444 percent gains this year compared to Bitcoin’s 78 percent spike in the same timeframe. In this week, the BNB/USD’s price rally towards the $200-level added 45 percent valuation to its market capitalization. In comparison, Bitcoin eked out 8.33 percent returns.

Why Binance Coin Rallied?

For starters, it was Bitcoin that sparked an upside run across the cryptocurrency market.

The benchmark cryptocurrency tends to influence trends in the altcoin space. As it rallied above $52,000 on Wednesday, only to correct later owing to profit-taking sentiment, it caused a capital spillover onto the altcoin market, which was still trading near its sessional low.

Traders do that. They first pump Bitcoin and later utilize their short-term profits to push the altcoin market upward. So it appears, Binance Coin got lucky.

Nonetheless, none of the other high-cap tokens logged massive gains as Binance Coin did. That may have to do with the token’s underlying fundamentals and technical positioning on short-term timeframe charts.

Psychological Trade Setups

At first, Binance Coin was consolidating sideways in a Symmetrical Triangle pattern. The structure forms when the price makes higher lows and lower highs, while its volume drops.

Meanwhile, if the Triangle appears during an uptrend, it points to a bullish continuation after the price breaks out of its range. Similarly, its formation during a downtrend risks bearish continuation. For BNB, it was an uptrend case.

Binance Coin, BNB, BNBUSD, BNBBTC, cryptocurrency
Binance Bullish Pennant Structure points to a rally above $200. Source: BNBUSD on TradingView.com

The price broke out to the upside following the Triangle’s formation (aka Bullish Pennant). Typically, the upside target, in this case, equals the length of the uptrend that formed before the consolidation move. That is roughly $85, which puts BNB/USD en route to $216 (as measured from the breakout point).

There is just one short-term risk: the Relative Strength Indicator. Binance Coin’s wild run-up has pushed the momentum indicator into overbought territory. Generally, that means the asset is trading higher than its intended valuation. Therefore, it should undergo a price correction to neutralize its overbought sentiments.

Should it happen, the BNB/USD exchange rate risks falling to $150, a level that is near its 20-4H moving average (the green wave). An extended sell-off could push the pair further lower towards the 50-4H moving average (near $136).

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