The Arbitrum (ARB) price has increased significantly since the beginning of June. The price cleared a critical level three days ago, possibly fueled by a supply shortage caused by whales withdrawing ARB tokens.
A whale has withdrawn 2.34 million ARB from Binance today. In the past three days, five whales have withdrawn a total of 10.5 million ARB. This could cause a supply shortage and increase the ARB price.
However, it is worth mentioning that ARB has a circulating supply of 1.275 billion, so the withdrawal amounts to less than 1% of the circulating supply.
Moreover, short-term time frames provide a mixed outlook, casting doubt on the long-term bullishness.
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Arbitrum Price Breaks out From Critical Resistance
The ARB price had fallen under a descending resistance line since reaching an all-time high price of $1.82 on April 18. The decrease culminated with a low of $0.90 on June 15.
However, the price bounced afterward and has increased since. On June 21, ARB broke out from the descending resistance line, suggesting that it had completed its correction.
Additionally, it cleared the $1.25 horizontal resistance area on July 15. However, the price has not initiated a significant upward movement yet. Rather, it is hovering just above the $1.25 horizontal area.
Nevertheless, the daily RSI supports the continuing increase. When evaluating market conditions, traders use the RSI as a momentum indicator to determine whether a market is overbought or oversold and to decide 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 indicator is above 50 and increasing, both signs of a bullish trend.
Will the Arbitrum Price Retrace Further?
The short-term six-hour technical analysis shows that the ARB price has traded inside an ascending parallel channel since June 15. Such channels usually contain corrective structures. Since the channel is facing upward, an eventual breakdown from the channel is the most likely future price scenario.
The ARB price is currently holding above the channel’s midline (red circle). If it breaks down, ARB could fall to the channel’s support line and possibly the $1.07 support area. The latter will be reached only if ARB breaks down from the channel.
The six-hour RSI supports the decrease. While the indicator is still above 50, it is decreasing and has generated a bearish divergence (green line).
This is a type of bearish outlook when a momentum decrease follows a price increase. It often precedes downward movements.
Despite this bearish ARB price prediction, reclaiming the channel’s midline will invalidate the short-term bearish outlook.
In that case, the ARB price can increase to the channel’s resistance line at $1.50.
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