Synthetix (SNX) is trading inside a short-term bullish pattern and is showing signs of a short-term bullish reversal. However, the longer term trend remains bearish.
The SNX has been declining along a descending resistance line since reaching a high of $26.91 on February 15. So far, the downside movement has led to the February 24 low of $3.32.
After reaching lower levels, SNX started a slight rally, which however failed to lead to a breakout from the descending resistance line, which is currently located at $4.70.
At the time of writing, the SNX was trading 84% below its all-time high.
Bullish Divergence
The daily chart shows that it is possible that the SNX will initiate an upward move and break out of the above descending resistance line.
This is because of the obvious bullish divergence that has developed in both the RSI and MACD. Such divergence often precedes a reversal of a bullish trend.
Besides, the RSI has already moved above 50, which is considered a bullish trend signal.
MACD movement above 0 would confirm that a bullish reversal is underway.
short term SNX movement
Furthermore, the six-hour chart shows that the SNX is trading inside a descending wedge since early January. A descending wedge is considered a bullish pattern, which means that a breakout from it would be the most likely scenario.
If one does, the nearest resistance area will lie at $5.90. This is the 0.618 Fibonacci Retracement resistance level and a horizontal resistance area.
A closer look shows that the SNX broke the $4.20 resistance area. Later on, it’s back and closer to validating it as support.
If the area holds, continuation of the upward momentum and eventual breakout would be expected.
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