Tron memecoin Sundog (SUNDOG) is up 8% in the past 24 hours, breaking out of a falling wedge pattern it had been trading in since September.
However, BeInCrypto analysis indicates that the recent rally could be a false breakout. This review explores the reasons behind this and highlights key signals for SUNDOG holders to watch closely.
High can be a trap for bulls
An examination of the daily chart of SUNDOG/USD revealed that the memecoin has broken out from the upper line of its descending wedge. This pattern is formed when the price of an asset moves between two descending trendlines, with the upper line acting as resistance and the lower one as support.
A break above the upper trendline of the wedge is a bullish move. However, a closer look at some of SUNDOG’s momentum indicators suggests that this rally could be a false breakout, potentially setting up a bull trap.
SUNDOG Descending Wedge. Source: TradingView
The Super Trend Line setup is an indicator of this potential bull trap. At the moment, the red line of the indicator is above the SUNDOG price.
In short, the Super Trend indicator tracks the general direction and strength of an asset’s price trend. Thus, when the line appears below the asset’s price, it indicates an uptrend, suggesting that the momentum may persist. Conversely, when the line turns red and appears above an asset’s price, bearish pressure is strong.
SUNDOG Super Trend Line. Source: TradingView
Furthermore, SUNDOG’s negative Balance of Power (BoP) readings confirm the possibility of a price reversal in the near term. At the time of writing, the crypto’s BoP stands at -0.82 despite its price increase.
This indicator measures the strength of buyers versus sellers in the market. A negative BoP suggests that sellers are in control and trying to push the asset price down.
SUNDOG Power Balance. Source: TradingView
SUNDOG Price Prediction
A combined reading of SUNDOG’s Super Trend and BoP indicators suggests that its break above the upper line of the falling wedge could trigger a bull trap when the attempt to retest the resistance line fails due to strong bearish sentiments in the market.
SUNDOG Price Analysis. Source: TradingView
At the moment, memecoin trades at $0.13. A reversal of its uptrend due to increased bearish pressure could see its price drop to $0.09 where support lies. However, if the uptrend continues, SUNDOG price could rise towards $0.20.
The article SUNDOG rises 8% but analysts warn of false breakout appeared first on BeInCrypto Brasil.