- ARB’s strong recovery has been challenged at $1.15, resulting in a narrow price consolidation.
- An increase in selling volumes accompanied by a decline in Open Interest rates adds another layer to the current market dynamics.
In recent days, Arbitrum’s [ARB] impressive bounce back from mid-June has encountered a significant impediment, leading to a phase of tight price consolidation. The cryptocurrency experienced a 25% surge, propelling it from $0.9200 to $1.15. However, resistance at $1.15 prompted it into a narrow price band of $1.06 to $1.15.
Concurrently, Bitcoin [BTC] retreated from its recent rally, modestly descending to $30.68k from $31k. This short-term pullback could potentially hamper further uptrend, strengthening the $1.15 resistance level for ARB.
In the latter half of May and early June, the $1.06 threshold served as a vital support level for ARB. However, amidst intense selling pressure, this support fractured on June 10, following BTC’s drop to $24k. A rebound in BTC, spurred by institutional interest, helped ARB to reclaim $1.06 as a support level.
Yet, the persistent $1.15 barrier has obstructed further upward momentum, placing ARB into a restrictive range formation. At present, a minor rally has left behind an FVG (fair value gap) between $1.0823 and $1.1062. Below this FVG zone, the short-term support lies at $1.064.
This span between the FVG and support could function as a bullish fortress. Assuming BTC maintains its bullish stand over $30k, it’s improbable for ARB’s pullback to develop into a downturn. A bounce back from the $1.064 level could be conceivable, aiming for the range high of $1.15.
Such a move could present a long opportunity, with further gains possible at $1.22 if ARB closes above the $1.15 threshold. If the $1.064 short-term support fails, this bullish proposition will be refuted, potentially leading ARB to retest levels at $1.0 or $0.92.
Additionally, the Chaikin Money Flow (CMF) indicates a substantial dip in capital inflows as it falls below zero. Similarly, the RSI has retreated from the overbought zone, crossing below the 50-mark, indicative of reduced buying pressure.
The Cumulative Volume Delta (CVD) on the 1-hour chart shows a significant decrease over the past few days, demonstrating a rise in selling volumes and short-term sell pressure. Concurrently, Open Interest (OI) rates, which monitor the number of open contracts on ARB’s futures market, have descended from a recent peak of about $150 million to nearly $130 million, suggesting growing bearish sentiment in the futures market.
Consequently, a retest of the FVG zone and short-term support appears probable, which could present fresh buying opportunities.
