BONK saw a bullish structure shift in the first week of January. This breakout appeared highly promising, but has faltered massively since then.
The popular memecoin ranks 6th in the sector, sorted by market capitalization.
CoinMarketCap data revealed that the memecoin sector has been hit hard by the past week’s losses. The sector is down 15.47% collectively, and BONK was down 18.77%.
For comparison, the leading meme, Dogecoin [DOGE], has shed 14.5%.
BONK rally only a blip in a longer-term downtrend
As covered earlier, the bullish structure break in early January came when the downtrend’s swing point at $0.0000103 was breached. Subsequently, Bonk [BONK] rallied to $0.0000134 but fell back over the rest of the month.
Bitcoin’s [BTC] inability to stay above $94.5k over the past two weeks highlighted bearish pressure in the market, and BONK faced sizeable selling pressure. As a result, the OBV fell below December’s low, keeping the OBV’s downtrend since August ongoing.
The path ahead for BONK
Source: CoinGlass
The cluster of liquidations around $0.0000074 has been swept. To the north, the next interesting magnetic zones were at $0.0000090 and $0.0000095.
The memecoin may see a price bounce to this liquidity pocket.
However, as things stand, it is unlikely the bounce would extend that high.
Traders’ call to action – Expect a short-term bounce and a reversal
Source: BONK/USDT on TradingView
The 1-hour price chart presented a bearish setup for traders. Based on the most recent impulse move on this timeframe, the $0.00000755-$0.00000785 levels were key Fibonacci retracement levels.
BONK would likely bounce to test these resistance levels before continuing its bearish move.
Traders can use this bounce to sell. The downward move would target the $0.0000064 local low, and could slide further to $0.0000060 and $0.0000053.
Final Thoughts
- The Bonk breakout in early January was promising, but it did not go as the bulls expected it to.
- A short-term price bounce followed by a bearish reversal is expected in the first week of February.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
