Bittensor’s latest rally of 160% (TAO() is showing signs of fatigue as it has formed a golden cross pattern that preceded previous steep corrections.
Takeaways:
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TAO has historically printed a cross in gold that preceded a drawdown of 40% on average.
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Bittensor has a high social volume, but retail excitement is muted.
TAO Price Risks 40% Drop in Next Weeks
The green line represents the TAO 20-day moving exponential average. It crossed over the 200-day moving exponential average.
The traders view the movement of a short term average over a long term one as an indication that the market is moving upwards. TAO, on the other hand, has seen this pattern appear near tops of local markets, and sometimes trigger a brief upward follow-through, before turning sharply.
TAO has dropped roughly 38.50%, 32.50%, and 45.50% in the past five to six weeks. The average drop is about 40%. If the same pattern occurs, Bittensor will likely fall to $200 before early May.
The downside risks of TAO are increasing as it’s relative strength index (RSI) The index has been above 70 for several weeks. Readings suggest that recent rallies may have been too rapid and far-reaching, increasing the likelihood of short-term cooling or profits being taken.
The macroeconomic conditions are also bearish. escalating US–Iran war The lifts oil prices, fuels inflation risksThe case for short-term funding is weaker. Federal Reserve easing.
The TAO rally lacks retail euphoria
Data resource reports that TAO’s rally sparked a dramatic increase in online discussions without the type of euphoria usually seen at local summits. Santiment.
The social volume on X, Reddit and Telegram has risen to the second highest level it’s been in six months. It trails only TAO $529 peak frenzy in November.
Despite this, the mood is still relatively low, with 1.5 comments being positive for each negative.
“This is generally a good sign that the rally can continue, with little interference from greedy traders that typically signal forming tops,” Santiment said.
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Even rallies fueled by improved sentiment, such as those triggered by TAO’s golden-cross fractal, can become bull traps.
TAO rallied roughly by 15.6%, 5,7% and 42.6% in the three previous golden-cross configurations before turning lower.
The average gain post-cross is around 21.30%, indicating a price increase in the short term for Bittensor towards $420 and higher.
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Source: cointelegraph.com
