FTX Token (FTT) has potentially completed its corrective trading structure. This would be confirmed by a breakout from the wedge pattern that it’s currently in.
FTT has been falling since Sept 9 after reaching an all-time high price of $85.74. So far, it has decreased by 58%.
It has gotten some support near the $34 horizontal area that has intermittently acted as both resistance and support since February 2021. Since the price is approaching it from above, the area is expected to continue holding as support.
Despite the considerable decrease, there is a very interesting bullish development in the form of a hidden bullish divergence in the RSI. Such divergences are often signs of trend continuation, and since the long-term trend has been bullish, a continuation of this movement would be likely.
The fact that the divergence is present in the weekly time frame further increases its significance.
Daily pattern
The daily chart shows that FTT is trading inside a descending wedge. The wedge is normally considered a bullish pattern, meaning that a breakout to the upside would be the most likely scenario.
Similar to the weekly time frame, there is a considerable bullish divergence that has developed in the daily RSI (green line) and is also present in the MACD signal line. Divergences in the MACD signal line are quite rare. The instance this occurred for FTT was a bearish divergence in April 2021 (red line), preceding a fall of 65%.
Therefore, it’s possible that the current divergence could have a similar result, except pushing the price back up.
Wave count analysis
The most likely wave count indicates that FTT has just completed an A-B-C corrective structure (black). The sub-wave count is shown in red. Waves A and C have nearly a 1:1 ratio, supporting the possibility that this is the correct count.
In order for this to be confirmed, FTT has to move above the A wave low (green line) of $48.10, which would also cause a breakout from the descending wedge.
The alternative bearish count suggests that FTT is actually mired in a bearish five-wave downward move (black). In this case, the previously proposed wave C would actually be wave three, even though the sub-wave count remains the same.
In this case, FTT would not break above $48.17, rather it would get rejected and fall towards $20.
FTT/BTC
Cryptocurrency enthusiast @Tradecraxt_X tweeted an FTT chart, stating that the pair could likely continue increasing in the daily time frame.
FTX/BTC has since broken out from an ascending parallel channel and validated it as support on Jan 22 (green icon). Such breakouts and retests usually precede large upward moves.
If the ongoing increase continues, the closest resistance area would be found at ₿0.013. This is the 0.5 Fib retracement resistance level and a horizontal resistance area.
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Disclaimer
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