Key Takeaways
Arbitrum (ARB), the governance token of the Ethereum layer-2 scaling solution, trades at $0.76. Earlier today, its price showed signs of being ready to move closer to $1.
But as soon as it hit $0.79, it pulled back, invalidating the bullish thesis. This rejection means that the Arbitrum toke price is still 64% down from its all-time high of $2.40.
While a drawdown like this usually signifies a buying opportunity, several indicators suggest that ARB might not have offered that chance.
On Dec. 7, 2024, the Arbitrum price rallied to $.1.17. By Dec 31, the token’s price had corrected to $0.72, ending the year on a tough note.
One week after this decline, ARB climbed to $0.91 again. Thereafter, it formed an ABC Elliot Wave correction. This corrective wave started with the countertrend at $0.72.
Another retracement followed the uptick at $0.91 in market wave B to $0.70 in wave C. While ARB’s price continues to hover around $0.76, the resistance at $0.79 indicates that the token will likely lose hold of the minimal support at $0.74.
If validated, ARB’s decline could extend toward wave C again at $0.70. The Moving Average Convergence Divergence (MACD), which measures momentum, also seems to support this outlook.
Some days back, the MACD reading was positive, which impacted Arbitrum’s price, which rose to $0.91. But as of this writing, the indicator’s reading has declined to the negative region.
This negative rating suggests bearish momentum around ARB. If sustained, it might not inch toward $1 anytime soon.
Further assessment of the daily chart shows that ARB’s price is still below the longer period of Exponential Moving Averages (EMAs).
For instance, the 50 EMA (blue) and 200 EMA (yellow) are in the same region at $0.80. Since ARB’s price is below this zone, it indicates a bearish trend.
This position also aligns with the thesis that cryptocurrency’s value will likely drop. To the upside, a major resistance lies around $0.91.
In December, when ARB failed to breach this resistance, its value decreased to $0.72. This month, the altcoin faced rejection at the point, eventually leading to a similar drop.
Hence, with low trading volume around the cryptocurrency, it is likely to face a drawdown below the 0.382 Fibonacci retracement line. ARB’s value could sink to the 0.236 retracement level at $0.64 if that happens.
Failure to hold this level might drive the price down to $0.45.
However, if the volume around ARB increases, this could change. Should that be the case, ARB’s price is above $1 within a short timeframe.