The Arbitrum (ARB) price risks breaking down from a corrective pattern that has been in place since June 10. Doing so will confirm that the trend is bearish and can lead to a new yearly low.
The price action, RSI readings, and wave count all indicate that the trend is bearish. Therefore, they legitimize the breakdown and suggest the downward movement will continue.
Arbitrum Price Risks Sharp Fall Due to Breakdown
On July 16, the ARB price broke out from the $1.25 horizontal area. At the time, it seemed like the price had broken out, and this was the beginning of a new upward movement.
However, that turned out to be untrue since the ARB price fell below the area shortly afterward. This shows that the breakout was only a deviation (red circle). This type of bearish development is often followed by downward movements.
The bearishness was further strengthened once the ARB price fell below the support line of an ascending parallel channel on July 24. Such channels usually contain corrective movements. Therefore, the breakdown from it is another sign that the trend is bearish.
Finally, the daily RSI provides a bearish reading. Traders utilize the RSI as a momentum indicator to assess whether a market is overbought or oversold and to determine whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is upward, bulls still have an advantage, but if the reading is below 50, the opposite is true.
The RSI is falling and is below 50 (red icon), both signs of a bearish trend.
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ARB Price Prediction: Wave Count Outlines New Yearly Low
The short-term six-hour technical analysis aligns with the bearish readings from the daily time frame. The main reason for this is the wave count.
The wave count shows a completed A-B-C corrective structure. This is evident because of the overlap (white line) of waves A and C and the presence of an ascending parallel channel. A decisive close below the channel’s support line will confirm the bearish breakdown and the validity of the count.
While the closest support area is at $1.05, the wave count suggests that the ARB price is expected to fall to its yearly low of 0.90.
Despite this bearish ARB price prediction, a movement above the wave C high of $1.35 (red line) will mean that the trend is still bullish.
The ARB price can increase to the next long-term resistance at $1.65 in that case.
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