- BNB lost 5% of its value on Friday following Thursday’s sell-off.
- On-chain data shows the possibility of a short-term rally.
- A bearish technical formation hints at Binance Coin’s drop to $200.
Binance Coin (BNB) was trading at the lower boundary of a bearish flag, hinting at a further downside. However, a hidden signal from the Arms Index and on-chain data point to a possible recovery in the near term.
Technical Formation To Push BNB To $200
BNB price action led to the appearance of a bearish flag on the daily chart. This is a significantly bearish pattern usually signaling the continuation of a downtrend. It is often formed following a sharp drop followed by a moderate recovery that triggers sellers to take profits on the minor rallies. What follows are massive sell orders that take the price below the technical formation.
In Binance Coin’s case, a daily candlestick close below the flag’s lower limit at $299 could trigger intense selling that could see the token of the world’s largest crypto exchange drop first towards $256 and later to the $200-psychological level. This would represent a 33% drop from the current price.
BNB/USD Daily Chart
Apart from the technical chart pattern, the down-facing moving averages and the downward movement of the Relative Strength Index (RSI) added credence to BNB’s gloomy outlook.
On the other hand, the Arms Index (TRIN) just sent a bullish sign when it fell towards the green line at 0.70. This was an indication that more buyers were in the market and were getting in on the dips.
If these buyers are able to hold the price above the $299 level, BNB could remain inside the flag for a few days. Increased demand would then push the token above the upper boundary of the bearish flag at $342, confirming an escape from the pattern.
In such a scenario, Binance Coin’s price may rise towards the $411 range high after overcoming resistance from the 50-day and 100-day SMAs sitting at $363 and $381 respectively.
Also supporting the possibility of a rebound for BNB were on-chain metrics from Santiment. According to data from this on-chain and market behavior analysis firm, BNB recorded its fifth consecutive week of a lower transaction volume in profit to loss ratio. This metric indicates that BNB has a higher likelihood of a short-term spike in price.
The chart above showed that there was little profit-taking going on in the BNB market. This is a sign that there could be room for a minor recovery from the current levels.