With Bitcoin’s recent price drop in the wider altcoin market, Hedera’s local token HBAR has dropped nearly 20% in the past seven days.
On the daily chart, tokens hover over dangerous dangers, approaching critical support levels, thus raising concerns about deeper corrections. However, not all signals are bearish. The data on the chain flashed two encouraging signs that could suggest a potential reversal.
Hedera's HBAR faces crash
The HBAR/USD daily chart reading shows that Altcoin trades the exponential moving average (EMA) for the last 20 days. With the pressure of climbing sellers, there may be a breach of the following $0.22 key support building in the next few trading sessions.
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HBAR 20-day EMA. Source: TradingView
The 20-day EMA measures the average price of assets over the past 20 trading days, giving the recent price a priority. This is a widely used technical indicator that can smooth out recent price action to help identify trends.
Its short-term momentum is weakening when the asset's price is expected to fall below this support level.
If the price is below this line, especially after an expanded uptrend, it marks a potential shift from bullish to bearish sentiment. This setting often triggers further sales as traders interpret it as a loss of short-term support.
HBAR slideshow, but the bulls hold the line
However, not all signals are bearish. Data on some chains suggests that potential reversals may be in progress. First, the HBAR clearing heat map shows that, according to coinglass data, the obvious liquidity cluster is about $0.29.
HBAR clearing heat map. Source: Xiaodian
The liquidation heat map determines the clusters where the price area may clear the leverage position. These maps highlight areas with high liquidity, often color-coded to show intensity, and brighter areas (yellow) represent greater liquidation potential.
When capital clusters at assets are at current market prices higher than the current market prices, they usually attract upward price movements. Traders target these areas to trigger stop loss or liquidation, creating short-term bullish pressure.
For HBAR, this liquidity cluster is about $0.29 and can be used as a price magnet, and the assets will be higher as the market moves to take advantage of this order pool.
Furthermore, despite underperforming prices over the past few days, HBAR's funding rate remains positive. As of this writing, this is 0.0092%, indicating a preference for long-term positions among futures market participants.
HBAR funding rate. Source: Xiaodian
Financing rates are a regular fee between long traders and short traders in the permanent futures market to make the contract price consistent with the spot price. When it is positive, more and more traders are betting on the rise in assets, eager for shorts to maintain their position.
The continued aggressive fundraising rate of HBAR is a sign of bullish sentiment among traders even during the recent decline. Once the market conditions stabilize, it hints at potential upward momentum.
HBAR's Destiny Hangs on a 20-Day EMA for $0.22
Improved market sentiment can enhance dynamic support for HBAR 20-day EMA $0.22. If this level is reached, it could be the launch pad for a short-term rebound towards the $0.26 mark.
HBAR price analysis. Source: TradingView
However, a decisive breakthrough below this support zone could make HBAR more unfavorable, which could put the price as low as $0.18.
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