Velvet [VELVET] has continued its bullish trend. Powered by the Aerodrome Finance partnership news, the token price briefly pushed past the $2.0 round-number resistance on Monday, June 29.
Since then, its momentum has slowed down. The altcoin saw an 11.5% correction in the past 24 hours, and its daily trading volume has fallen by 27.1%, according to CoinMarketCap statistics.
Assessing if Velvet can reach its projected extension targets
AMBCrypto had reported on the bullish catalysts, technical indicators, and price structure, but also warned of increased volatility. The rally to $2.17 has subsided within the past 72 hours.
Source: VELVET on TradingView
The 1-day structure was bearish despite the deep correction from $1.922 to $0.302 in the second week of June. Interestingly, this retracement halted at the 20-day moving average dynamic support.
Since this correction, VELVET has rallied to the local $1.922 highs once again, climbing to $2.17 before pulling back in the past three days as discussed earlier.
The volume indicators gave mixed signals. The OBV was rising higher to show steady buying pressure, but the CMF sank below -0.05 in the past couple of days. Its current reading of -0.17 highlighted severe capital outflows from the VELVET market.
This incongruence between the volume indicators meant that there was short-term distributory pressure on the altcoin. Overall, the buying volume in recent weeks has been high, and the current wave of selling has not dented it.
Traders’ call to action- Use a pullback to buy
The risk-to-reward ratio was too low for traders to go long now. At the same time, there was no guarantee that VELVET had run its uptrend to the fullest and would now descend toward $0.48 and lower once again.
Source: Coinalyze
Though the OI was in decline, the spot CVD remained steady, as did the funding rate. This suggested short-term bearish momentum, but there was a good chance VELVET bulls would try to claim the $2 support once more.
The 20-day moving average at $0.75 was an interesting dynamic support to keep an eye on in case of a pullback.
Final Summary
- Velvet had rallied to a high of $2.17 but was unable to flip the $2 psychological level from resistance to support.
- It is unclear how deep the current pullback could go, but the evidence pointed toward controlled short-term distributory trends instead of full-blown profit-taking.
