Binance Coin (BNB) recently surged over 5%, making it the top gainer among the top ten largest cryptocurrencies by market cap. Despite this upward movement, technical indicators suggest that BNB may be facing a potential bearish reversal, particularly if broader market conditions don’t continue to support the positive trend.
Bearish Divergence and Market Indicators
BNB’s price hit $533 after bouncing from a low of $503 within the last 24 hours. However, its daily chart signals a bearish divergence, with a double-top pattern formation, often considered a bearish indicator. BNB’s price tested the $600 resistance twice, once in late July and again recently, but failed to break through both times, forming a neckline at $464.
If BNB’s price drops below this neckline, a bearish breakout could be confirmed. Conversely, a breakout above the $600 resistance could invalidate this bearish outlook if the current uptrend holds.
The Relative Strength Index (RSI) is currently at 47, indicating that sellers still have control. The RSI needs to rise above the signal line to affirm bullish momentum and challenge the double-top pattern.
The Directional Movement Index (DMI) further supports a possible bearish reversal, with the positive DI (blue) remaining below the negative DI (orange), which reflects weakening upward momentum.
Resistance and Liquidation Points
According to Hyblock Capital, BNB has significant liquidations clustered around $548, which could serve as a strong resistance level. If traders who bought into the recent rally take profits near this level, it could further impede BNB’s ability to maintain its gains.
BNB Chain’s Declining Network Activity
Another challenge for BNB is the declining activity on the BNB Chain. In the past week:
– The number of unique active wallets on the network dropped by 25%.
– Transaction volumes fell over 30%, from $850 million to $350 million.
This decline in usage could reflect waning market interest in BNB, making it harder for the coin to sustain its upward momentum.
Bearish Sentiment
Additionally, data from Coinglass shows that BNB’s Funding Rates have been predominantly negative over the past month, suggesting a prevailing bearish sentiment among traders.
Conclusion
Despite recent gains, BNB faces several risks that could lead to a bearish reversal. Key indicators like the double-top pattern, RSI, and DMI point to weakening bullish momentum. The decline in BNB Chain’s usage and the negative Funding Rates add further bearish pressure. If BNB fails to break above the $600 resistance and drops below the $464 neckline, a steeper decline could follow.
