Yearn Finance (YFI) is approaching its all-time high price resistance at $43,500, a level that hasn’t been tested since September 2020.
However, there are short-term signs of weakness present, indicating that a correction is likely to occur before another breakout attempt.
Yearn Finance Approaches All-Time High
YFI had been following a descending resistance line since reaching an all-time high price of $43,966 on Sept. 12, 2020. After three unsuccessful attempts, YFI managed to break out on Jan. 7 to reach a local high of $39,939.
After validating the line as support, YFI reclaimed the $28,000 area, validated it as support, and has been moving upwards. Currently, it is approaching the all-time high resistance area at $42,500.
Technical indicators are relatively bullish. Both the MACD and Stochastic oscillator are increasing, but the daily RSI has generated a bearish divergence, which could initiate a correction.
Therefore, a look at lower time-frames is required in order to better determine the direction of the next move.
The six-hour chart shows a potential double-top pattern near $38,000. Similar to the daily time-frame chart, the double top has been combined with a bearish divergence in the RSI and MACD.
YFI is also following an ascending support line, which is currently at $34,000. While a drop towards this support line seems likely, a breakdown would likely knock YFI back to the 0.618 Fib retracement level at $28,000.
While a decrease towards the support line is likely, we cannot yet determine if YFI will break down from the support line or bounce.
YFI Wave Count
Cryptocurrency trader @TheEWguy outlined a YFI chart which suggests that YFI is in wave 4 with another high expected.
While YFI has already reached a new local high, the movement from the lows does not look impulsive. Therefore, it’s possible that YFI is still in wave 4 (shown in orange below), which has taken the shape of a triangle. This would also fit with the possible decrease resulting from the double-top.
While the preliminary target remains at $43,500, a more accurate projection will be given once wave 4 is complete.
The sub-wave count for the triangle is shown in black.
While Yearn Finance (YFI) is expected to make another attempt at reaching a new all-time high, a short-term drop is expected before the upward move resumes.
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.