Key Takeaways
After reaching its yearly high of $12 in March and reverting to the horizontal support zone at $3, Filecoin (FIL) now sits in a consolidation phase.
If it can hold key levels, this could mark the end of a corrective wave, potentially setting the stage for another upward trend.
The price action in the coming days will be crucial in determining whether FIL embarks on a new bullish phase or continues its sideways movement.
After reaching an all-time high of $230 in April 2021, FIL entered a prolonged bear market, bottoming at $3 on Dec. 18, 2022.
This low established a horizontal trading range, with resistance around $8, creating what appears to be a consolidation or accumulation zone.
On Oct. 19, 2023, FIL revisited its $3 support level and rebounded, again attempting to break past the $8 level. This effort was halted at $8, leading to a pullback to $5 by Jan. 23 this year.
Following the formation of a higher low, FIL set a higher high near $12 on March 8, marking a 290% increase from its $3 low.
This rally represented the end of a five-wave advance, which led to a sharp correction afterward. Filecoin then dropped by 60%, reaching a low of $4.60 on April 13, where it entered a period of sideways trading.
However, on Aug. 5, it moved lower and reverted to its $3 horizontal support. Since then, it has traded sideways again, around $3.60, which could be interpreted as another consolidation period before the next bullish phase.
If FIL made a five-wave advancement until March, the downtrend until the present could be its corrective wave, leading to sustained upward advancement at its next move to $16.
Zooming into the hourly chart, the consolidation made a five-wave pattern, forming a symmetrical triangle from Aug. 5.
This is not typical for a starting uptrend, as we should have seen an ascending one that would be a leading diagonal in this context.
Although nothing implies bullishness, we are maintaining the bullish outlook as one of the likely scenarios.
Symmetrical triangles indicate equal pressure from each side until a decisive breakout is seen, and we don’t know whether buyers or sellers will win the struggle.
From the Oct. 20 high of $4 – the ending point of the five-wave sequence, we saw a decrease to $3.20. This could be the breakout move, but the price quickly recovered to $3.78 on Oct. 30.
This is still a lower high than on Oct. 20, so should the price make a downturn, it could imply the breakout was bearish. But if the rise continues past $4, the likelihood of FIL entering a new bull phase would be high.