Mantra (OM) Price Nears $7 as Bearish Divergence Signals Potential Reversal

Key Takeaways

• The OM price recovered after briefly dipping below $6, but the MFI showed weak buying pressure.
• OM may face resistance between $7.52 and $7.73, where significant sell orders could cause a pullback.
• A bear flag formation has emerged, typically signaling a downtrend continuation. So, what next?
• Interested in buying or selling MANTRA OM coin? Read our review of the best exchanges to buy and sell MANTRA OM.

After its brief decline below $6 last Monday, MANTRA (OM) price has recovered and is on the verge of hitting $7.

However, despite the recent bounce, OM’s price might struggle to continue this ascent.

Several indicators suggest that buying pressure around OM is weakening. If this trend persists, the token could face a significant pullback, with the following levels likely to act as targets.

OM Bullish Hopes Fade

OM’s price decline from $8.99 on Feb. 23 forced it to form a falling wedge as the token hit $5.89 earlier.  A falling wedge is a bullish reversal chart pattern formed by two descending trendlines, with one representing lower highs and the other lower lows.

It typically signals a potential breakout to the upside. According to the daily chart, OM validated the bullish pattern by rising to $6.84 today.

This trend gave hope that the token could continue climbing toward its all-time high. However, technical indicators like the Money Flow Index (MFI) show that this is unlikely.

The MFI shows the level of buying and selling pressure around a cryptocurrency. When the MFI reading increases, it indicates rising buying pressure.

On the flip side, when the reading falls, it indicates selling pressure. As the chart below shows, as OM’s value increased, the MFI dropped, indicating a bearish divergence.

If this trend continues, OM’s price might find it challenging to break above the resistance of around $7.62. Instead, a decline toward the $6.25 support could be next.

On-chain data from IntoTheBlock also seems to agree with this bias. Specifically, the In/Out of Money Around Price (IOMAP) shows that the token could face resistance between $7.52 and $7.73.

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951 MANTRA addresses accumulated nearly 190 million OM tokens at this price range.

Therefore, as OM tries to breach $7 toward $8, it could face a sell wall that could drag the price down.

OM Price Forms Bear Flag, Downtrend Likely

Further examination of the daily chart shows that the price action has led to the formation of the bear flag.

A bear flag is a chart pattern that forms after two declines, with a brief consolidation or retracement period between them.

This pattern typically signals the continuation of a downtrend once the price breaks lower. On the daily chart, OM’s price formed a flag with the recent rise to $6.84.

However, the negative reading of Moving Average Convergence Divergence (MACD) shows that the uptrend is unlikely to continue. Due to the bullish momentum shown by the MACD, OM’s price could reverse downwards.

Regarding the potential targets, the Fibonacci retracement level shows that the token could drop to $5.18 if demand fails to pick up.

However, if the MACD reading turns positive, OM’s price might jump toward the 0.786 Fib level at $7.44.

This could drive the token toward a new all-time high of $9.14 if sustained.