YEREVAN (CoinChapter.com) — Stacks (STX) price reached $1.14 on Dec. 5, after rallying 60% week-to-date and 162% from its mid-September bottom. Several factors propelled the coin, including the Bitcoin rally, which caused a bullish wave across the market (more details to follow). However, STX price could pare the recent gains, technicals say.
Stacks (STX) Price Might Pare Its Gains
In short, STX price action formed a technical pattern dubbed the “double top.” It is often used to predict the reversal of an upward trend. The double top looks like the letter “M.”
This pattern occurs when the price of an asset rises to a high, retreats, and then rises to the same high again before declining once more. Traders can consider the pattern complete and expect reversal once the price falls below the support level – the lowest point between the two peaks.
Target price – 60% lower
Thus, the target price for STX in case of confirmation would stand below $0.44, i.e. the token could lose over 60% of its value, paring the recent gains. As of Dec 5, Stacks STX price action did not confirm the pattern yet. However, it retested the “double top” level as resistance, threatening further losses.
Moreover, the STX relative strength index (RSI) charted through ‘overbought’ territory above 70, which generally indicates a profitable market exit point. If enough Stacks investors decide to take profit, STX price could drop further.
Meanwhile, it is important to note what caused the Stacks STX price rally in the first place.
What propelled Stacks STX
As mentioned, Bitcoin propelled Stacks STX price higher. However, the reasons behind Bitcoin’s uptrend are also noteworthy. The rally was partly fueled by “panic buying,” as traders and investors rushed into Bitcoin amid favorable market conditions.
Moreover, in a Dec 4 report, crypto investment services provider Matrixport noted the elevated levels of Bitcoin perpetual futures premium versus the spot price, which could indicate a fear of missing out (FOMO) driving the markets.
Additionally, market participants were betting on lower interest rates, with an 86% probability of a lower Fed funds rate by May, according to the CME FedWatch tool. This expectation was based on dovish talk from some Federal Reserve officials, a weakening dollar, and relatively sturdy domestic data.
Investors continued to invest in crypto funds, with asset manager CoinShares reporting another $172 million of net inflows last week, continuing a 10-week streak totaling $1.7 billion. This steady inflow of investment into crypto funds indicates a sustained interest in digital assets, including Bitcoin.