Filecoin (FIL) Eyes Initial Stages of Long-Term Upward Momentum

Filecoin’s (FIL) breakout on Sept 30 put an end to a corrective period that had been going on since Sept 5.

The the potential upward movement is not yet confirmed, there are strong signs that FIL is in the early stages of a significant increase.

FIL breaks out

FIL has been moving downwards since Sept 5, when it reached a high of $120.17. The downward movement took the shape of a descending wedge, which is considered a bullish reversal pattern. Therefore, in the majority of the cases, the price would be expected to break out from the pattern.

On Sept 30, FIL finally broke out, putting an end to the ongoing correction. It proceeded to reach a high of $81.22 on Oct 8 before decreasing. The token is currently attempting to find support. 

Technical indicators provide a neutral picture. The MACD, which is created by a combination of short- and long-term moving averages is right at the 0 line. This is a sign of an undetermined trend, since both the short- and the long-term trends are moving at the same rate.

The RSI, which is a momentum indicator, has just fallen below 50. While such crosses suggest that the trend is bearish, it remains to be seen if it will reclaim the line, since it is only incrementally below it.

Therefore, a look at lower time-frames is required in order to determine the direction of the future trend.

Chart By TradingView

Future movement

The shorter-term two-hour chart shows that FIL is following a descending resistance line. It has been doing so since Oct 8. As long as it is doing so, the short-term trend is considered bearish.

However, FIL bounced right at the 0.618 Fib retracement support level (green circle), before making an attempt at breaking out. A breakout from the line would indicate that the correction is complete. 

If FIL fails to do so, it would likely revisit the $56.70 area. This is both a horizontal support area and the 0.786 Fib retracement support level.

Chart By TradingView

Wave count

Cryptocurrency trader @Thetradinghubb outlined a FIL chart, stating that the token has completed an A-B-C corrective structure and could now move upwards.

Source: Twitter

It is possible that the entire upward movement from Jul 21 to Sept 5 (highlighted) was part of wave one of a bullish impulse (orange). This means that it is the beginning of a new long-term upward movement. The main reason for this is the fact that the move is created by five distinct waves (black).

Furthermore, the ensuing drop ended at the 0.786 Fib retracement support level (green circle). This is common for corrective movements. 

Therefore, if the count is correct, FIL will continue increasing and break out above the Sept high. 

A decrease below the Sept 26 low of $50 (red line) would invalidate this potential count.

Chart By TradingView

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