Bittensor (TAO) Faces Bearish Correction After Recent Rally, Where Is the Price Headed Next?

Recent technical analysis suggests Bittensor's TAO token may face a bearish correction after its rally lately. Trader and analyst Alan Santana shared charts on TradingView indicating potential downward pressure on TAO/USDT.

Recent technical analysis suggests that Bittensor’s TAO token might be facing a bearish correction after its recent rally. Trader and analyst Alan Santana shared charts on TradingView that indicate potential downward pressure on TAO/USDT.

According to the analysis, several bearish signals are emerging, including a rising wedge pattern and weakening momentum indicators.

TAO Indicators Hint at Potential Reversal

Santana's analysis of the TAO chart shows a rising wedge pattern, which is typically viewed as a bearish reversal signal. The token ascended to a high on October 7th but has since faced resistance and signs of weakness. Several red candles and increasing bearish volume indicate selling pressure.

The price has closed below both the 8 and 13-period Exponential Moving Averages, which could signal a shift toward bearish momentum. This breakdown below key support levels suggests further downside potential for TAO.

Santana's analysis also highlights that the RSI is trending down, while the MACD appears weak. These indicators provide additional evidence of waning bullish momentum in the market.

Fibonacci Levels May Provide Support for TAO

The analyst identified key Fibonacci retracement levels that could act as support zones for TAO. The 0.618 retracement level is around $338.4, while the 0.786 level is near $262.1. These areas may offer temporary price stability if a correction unfolds.

Santana's chart suggests a possible price target around the $338 area, corresponding to the 0.618 Fibonacci level. However, he adds that TAO's price could extend its decline to the 0.786 level near $262 if selling pressure persists.

MACD Analysis Confirms Bearish Outlook

A separate chart focusing on the MACD indicator reinforces the bearish sentiment. After initially peaking in late September, the MACD has since generated a bearish crossover. This indication, which typically signals a trend reversal, strengthens the case for further price declines.

Declining MACD histograms further confirm the decreasing upward momentum. This technical arrangement, in conjunction with the bearish crossover between the MACD line and the signal line, lends more credence to the bearish outlook for TAO.

While the analysis anticipates a potential correction, it's noteworthy that TAO has experienced a substantial surge since early August, with gains exceeding 300%. Considering this rally, a short-term pullback would not be unexpected and could be viewed as a healthy consolidation phase for the token.

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