Binance Coin was at a critical juncture post the broader market crypto sell-off. The large-cap alt had a single chance to evade another drastic sell-off should its price decline below $320. At the time of writing, BNB traded at $334, down by 12% over the last 24 hours.
Binance Coin Daily Time Frame
The region between $340 and $320 was extremely significant on Binance Coin’s daily chart. Apart from hosting a daily demand zone (areas where buying activity outweighs selling activity), the area anchored the ‘neckline’ of a larger head and shoulders pattern.
Head and shoulder patterns are considered bearish setups. They are spotted after the price forms a peak and then declines to the base of the prior move. A breakdown occurs when the price fails to hold above the base or ‘neckline’.
In BNB’s situation, a breakdown would put the market at risk of another 20% decline. The Visible Range Profile, which highlights strong support/resistance levels through historical trades, showed that BNB’s next strong defensive option lay only between $260-$270. Other support areas such as $300 and $280 were relatively weaker and the chances of such spots holding up during extreme FUD is low.
The daily RSI does deserve a mention as the index was close to the oversold zone. However, the reading is often discounted when there is an active broader market sell-off. In such situations, individual markets recover only once the driving force (Bitcoin) turns risk-on.
Indicators
Other indicators such as the Directional Movement Index and MACD carried a clear bearish preference. However, it was important to note that the Average Directional Index still traded below 25 and volatility was not extremely high just yet. Thus, if Bitcoin can sustain its value above $35K, there was a chance that BNB could hold onto its current support zone.
Conclusion
Binance Coin was on course for a return to $260-$270. The price was trading at the neckline of a head and shoulders pattern and a breakdown was expected. If an immediate BTC rebound takes place, there was an inside chance that BNB could hold on to $320. In either case, shorting BNB below its immediate support zone was a more ideal trade than any long bets at the moment.