Kite (KITE) has unexpectedly benefited from the crypto rally over the past 24 hours, with its market cap increasing by approximately $48.6 million. This happened as its value increased by approximately 23% on the charts.
Market bulls may now dominate the headlines. But still, on a structural level, KITE appeared to be weakening at the time of its publication. In fact, a pullback looks likely as buyers run out in the short term.
KITE stands in a key supply region
Structurally, KITE may be in a vulnerable position at the moment.
The altcoin’s recent rally has pushed the crypto into a key supply zone on the 4-hour chart. Supply zones mark areas where sales orders accumulate, and the possibility of a decline from this level is always high.
This level also appears to coincide with the 0.786 Fibonacci resistance, signaling strong resistance as the price trades in this zone.
Given the selling pressure in this region, a potential pullback would drag KITE towards the support levels on the chart.
The analysis also pointed to the nearest support zone at the 0.618 Fibonacci level (or $0.13). If this fails to attract enough buy orders to push the price higher, KITE will slide to the 0.5 Fibonacci line (or $0.124).
If the price returns to the bullish structure marked by the black line before its rise, this structure will become invalid. This means that the bears will de facto determine the course of the price going forward.
Momentum indicators show that buyer pressure is decreasing
Buyer pressure no longer had the strength it had before. Chaikin Money Flow (CMF) stood out as one of the key indicators reflecting this decline. The overall CMF trend had a reading of 0.39, but a slight decrease also indicated an increase in sales volume.
Although the readings do not confirm a bearish trend, a sustained decline will send the price backwards in the short term. Unless CMF turns into negative territory on the chart.
Added Aroon Indicator’s print-time overlay to this view. Specifically, Aroon Up was at a maximum reading of 100% while Aroon Down remained at around 57%.
The market will not enter a decisive bullish phase until this gap widens to 100% on Aroon Up and 0% on Aroon Down. A strengthening bull trend usually sustains these readings.
Spot data shows investors making money from KITE
Finally, spot market data seemed to confirm that investors were indeed making money from KITE.
Dot Net Stream data Statements from CoinGlass signaled a clear selloff, with Netflow reaching approximately $312,000, while total KITE sales during the period totaled approximately $5.72 million.
When the selling pressure gets this high the price tends to pull back in line with the previous trend which attributes these selling to the KITE trade to the supply level on the chart.
Final Summary
- KITE’s 23% rally has dragged it directly towards the 0.786 Fibonacci resistance, a supply zone where stacked sell orders have exposed the asset to a decline.
- Spot Netflow turned negative at approximately $312,000 on total sales of $5.72 million.
