Fantom prices in free-fall after breaking below bearish chart pattern

NEW DELHI (CoinChapter.com) — DeFi platform Fantom prices are in free-fall after breaking below the neckline of a bearish technical pattern called the double top pattern.

In detail, a double top is a bearish technical reversal pattern. It appears when an asset reaches a high price level twice in a row with a moderate decline between the two highs. Then, prices falling below support equal to the low between the two highs confirm the pattern.

Once an asset’s prices break below the support level, the price target equals the distance between the pattern’s height. Hence, the Fantom token has a price target of $0.53, a drop of 60% from the breakout level if the double top pattern holds.

FTM prices first broke below the neckline of the pattern on Mar 10. However, the token prices rallied for a while before breaking below the neckline again on Apr 6.

FTM Price Chart

Fantom prices have fallen more than 55% from Apr 6’s high of $1.461 to reach an intraday low of $0.652 on Apr 30, its lowest since Aug 30, 2021. Furthermore, FTM prices fell below the psychologically vital support at $1 on Apr 29, losing over 14% intraday.

Also Read: Fantom (FTM) could hit $5-6 next — analyst explains why.

Meanwhile, momentum oscillator MACD continues to be bearish for the FTM token. Negative bars on the MACD histogram are expanding, indicating the MACD line (difference between 12-day and 26-day EMA) is moving away from the MACD signal line (9-day EMA of MACD).

Expanding negative bars indicate a strengthening bearishness of the FTM token’s price momentum.

If the downtrend continues, FTM prices could fall to immediate support near $0.66. A sustained downtrend would likely force Fantom below immediate support near $0.6. Finally, a marketwide sell-off could see FTM prices fall to $0.54 before recovering.

Fantom’s downtrend seems to follow the overall crypto market’s fortunes, which have been in a downtrend thanks to macro cues and the geopolitical tensions between Russia and Ukraine.

Overbought RSI Might Indicate Trend Reversal

Meanwhile, the relative strength index for FTM prices is oversold, with a value of 20.91 on the daily charts. The RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. When the RSI goes below 30, the asset enters the oversold region.

An oversold RSI indicates a bullish trend reversal is on the cards. With FTM prices at oversold levels, investors who rely on RSI would likely move in to buy the dip and trigger a rally. Moreover, the FTM token also broke below the lower trendline of the Bollinger Bands indicator.

In detail, Bollinger bands consist of a simple moving average (middle band) and an upper and lower band. The two bands are usually two standard deviations from the middle band. Therefore, when an asset’s prices break below the lower bands, it denotes an oversold condition.

Also Read: The Graph (GRT) token might jump 380% if the bullish pattern holds.

Traders relying on either of the two indicators might start a buying spree, pushing FTM prices to immediate resistance near $0.77. A strong uptrend might see Fantom break above immediate resistance to target $0.866.

Finally, a sustained buying spree could see FTM prices reach near $1 before retreating.

At the time of writing, FTM was changing hands at $0.677, down 18.9% on the day.