One of the top performers over the last four weeks was Maker DAO’s MKR token. After having been hard at work during this time period, the bulls might take some rest.
At the time of writing, MKR was up 89% from its most recent local low of £515 to trade at £989 for a strong bullish run over the last four weeks. However, the bullish momentum was ready to be broken, according to multiple signs.
MKR’s recent retest of a long-term descending resistance line was one of the causes for the aforementioned expectation. This has been in place since August last year and has so far maintained its strength. It is interesting to note that in the past two days, the altcoin’s price action has surpassed this resistance line. Since then, there has been little further upside.
The strong rebound made sure that MKR was already significantly overbought due to the powerful rally. Its Money Flow Index (MFI) showed that liquidity had been leaving the cryptocurrency.
Despite this, MKR had not experienced a major decline as of the time of writing. This might be because there is some demand, which counteracts the selling pressure. As that demand dwindles, MKR might favour the bears.
Several on-chain indicators also supported the assertion that the resistance retest caused a considerable spike in selling pressure. For instance, within the last 24 hours, MKR’s age consumed metric had its greatest four-week surge. This meant that substantial amounts of coins were moved during the time period.
In the meantime, during the previous 24 hours, the mean coin age metric fell to its lowest monthly level. This suggested that additional coins had recently been moved. This was also in line with selling pressure in the resistance range or overbought zone.
The supply dynamics showed that MKR was under a lot of inbound selling pressure at the moment. From 12 to 17 October, the supply held by the top addresses increased significantly. The metric also corroborated the last two days’ high outflows.
The drop in supply held by these addresses matched the levels last seen on October 12. Based on this, MKR might fall below £798 in the coming days.
When the retail sector inevitably imitates top addresses, the coin will be subject to intense selling pressure. Despite the strong likelihood of this happening, investors should also pay attention to the macroeconomic outlook.