The strong rise of bitcoin from $3,693.85 at the start of 2019 to highs of $13,880 last month has left many altcoins in ruins. Many people have dumped their crypto tokens in favor of the surging bitcoin.
While other crypto tokens suffered brutal devaluations against bitcoin, there’s one that has managed to go against the tide. Ren (REN/BTC) opened the year at 549 satoshis. Seven months later, it climbed as high as 1,342 satoshis. That’s an impressive 144.44 percent gain while almost every cryptocurrency has nosedived against bitcoin.
The best thing about Ren’s ascent is that the bull party is just getting started.
The primary reason why we believe that Ren could have tremendous upside potential is because of its lengthy accumulation period. A look at the daily chart shows that the crypto token was trapped in range accumulation from Dec. 6, 2018 to July 20, 2019. During that period, the cryptocurrency traded in a wide range between 400 satoshis and 890 satoshis.
With a solid base in place, Ren broke out of a large double bottom pattern on the weekly chart when it took out resistance of 890 satoshis on July 20. The breakout signaled the start of the uptrend from the macro perspective.
The technical breakout attracted trend followers and breakout buyers. As a result, Ren launched a breakout rally that sent the market to its 2019 high of 1,342 satoshis.
With a gain of over 140 percent for the year, the cryptocurrency is ripe for a significant correction. So far, we are seeing signals of short-term bullish exhaustion.
We spotted a bearish divergence on the daily RSI. On top of that, the cryptocurrency is trading in overbought conditions in both the daily and weekly time frames. Lastly, there’s a large wick on top of today’s daily candle that indicates profit-taking.
Even with these bearish signals, Ren remains in a technical uptrend. Thus, Ren appears to be a strong buy-on-dips candidate.
The first level of interest is the current range midpoint of 1,115 satoshis. If the bulls hold that level, then resistance of 1,340 satoshis probably would not last long.
On the other hand, a move below 1,115 satoshis will likely drive the price down to 890 satoshis. At that point, the market would be undervalued and that condition would catalyze the resumption of the uptrend.
Therefore, the smart way to go about trading Ren is by practicing patience.
Allow the correction to take place. If the range midpoint survives the pullback, then Ren will likely take out the range resistance of 1,340 satoshis and print new highs. Otherwise, you can bottom pick at 890 satoshis and ride the next wave up.
In either case, buyers of this pullback will very likely be rewarded in the coming weeks.
With bitcoin starting to show signs of weakness, we believe market participants could rotate their profits and capital into strong altcoins. Ren is one of the few cryptos that’s showing significant strength against bitcoin. While technical indicators are overheated, the expected pullback gives you the chance to enter long positions at a good price before the market resumes its expected uptrend.
The initial target is 1,790 satoshis. Above that, it is likely blue skies for Ren.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.
Last modified: March 4, 2021 2:39 PM