DFI.Money (YFII) has been, for the most part, decreasing since Sept 12. It appeared to have reversed its trend at the beginning of October but has since fallen back to its daily all-time low.
Whether or not YFII bounces at the current support level will be a strong indication of new negative price discovery or reversal of the trend.
YFII Begins To Bounce
On Oct 7, YFII reached a low of $1,169. It began an upward move shortly afterward, reaching a high of $2,585 after only two days, measuring a total increase of 120% since the lows. However, YFII has been gradually falling back.
At the time of press, YFII was trading below the 0.786 Fib level of $1,470. This Fib level is also very near to the previous resistance area, creating a strong support level between $1,400-$1,470.
Short-term technical indicators are bullish. Both the RSI and MACD have generated considerable bullish divergence, the former being inside its oversold region, a sign that a reversal is likely near.
Therefore, YFII is expected to bounce upwards from the current support level.
In addition, it seems that YFII is trading inside a descending wedge and has been doing so since Oct 10. Since the wedge is considered a bullish reversal pattern, a breakout is expected.
If YFII begins moving upwards and breaks out from the wedge, the closest resistance levels would be found at $2,500 and $3,050.
Cryptocurrency trader @CryptoTony_ outlined a YFII chart, stating that the price will likely decrease once more towards $1,400 before initiating a rapid upward movement towards $3,600.
With the aforementioned Oct 7 low, it seems that YFII successfully completed an A-B-C corrective formation (shown in black below).
The movement afterward (highlighted) looks impulsive, so it is possible that YFII began an upward trend that will take the price to the resistance levels at $2,500 and $3,050.
A closer look reveals a completed five-wave formation and an ensuing A-B-C corrective structure (both shown in red).
Furthermore, waves A:C have a 1:1.61 ratio, which is very common in such corrections. This supports the possibility that YFII has reached a bottom and will now begin to increase.
A decrease below the wave 1 low of $1,169 would invalidate this particular wave count.
To conclude, it is possible that YFII has begun a new upward movement and will increase towards the resistance levels outlined above.
Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.