Should VeChain investors expect more pain next week?

Saif Naqvi
Source: Pixabay

Since its late-March rally, VeChain has looked increasingly bearish as traders depart from the crypto market over fears of further Bitcoin retracements. For VET, the short-mid term outlook wasn’t encouraging for optimists. A lackluster RSI and an exodus of traders could see VeChain fall by 27% next week if bulls fail to hold the price above $0.0272.

Following several alts that retraced massively in the last couple of weeks, VeChain retraced by 50% and dropped to near one and a half year low on 13 May. In the process, VET lost out on crucial support of $0.039 on 9 May and has since attempted to find footing around $0.0281.

Source: TradingView

Although a distressed VET performed up to expectations during last week’s relief rally, a bearish bias was still visible on the weekly chart. The candles traded below their weekly 20-SMA (red) while the Relative Strength Index marched deeper into the bearish territory – both of which assisted short-sellers to take up arms against the market.

Source: Santiment

Meanwhile, there wasn’t much data to suggest that buyers could surprise investors with a rally. Exchange volumes were significantly low since 12 May as investors and traders were maintaining caution despite VET trading at discounted levels.

Source: LunarCrush

Weakening social volumes was another bane. The same has continued to slide for a month now, suggesting that speculative/hype trading would remain low next week until a major development moves the broader crypto market.

VeChain Daily Chart

Source: TradingView

An exodus of bullish traders leaves VeChain in an uncomfortable spot should its price decline below $0.0272. A breakdown could open the floodgates for another 17% fall to January 2021 levels of $0.0229. Overall, the decline marked a full 27% loss from VET’s press-time level.

Since chances of a rally of slim, VeChain would likely have to depend on Bitcoin’s cues for its movement. If BTC breaks above a major level and attracts trading inflows to the market, VET could be rescued from its bearish bias. However, any gains made below the 20-SMA (red) would likely be short-lived and VET would have to move above $0.044 to revert to a favorable narrative.