This article provides a technical analysis of Injective Protocol (INJ), cautioning against its overvaluation and suggesting a potential pullback based on the daily chart, daily RSI, weekly volume, and overall weekly chart.
Injective Protocol (INJ) has garnered attention in the cryptocurrency market, but a closer look at its technical analysis reveals potential concerns.
We will delve into the key aspects of INJ’s price performance, including the daily chart, daily RSI, weekly volume, and the overall weekly chart. Let’s examine these factors to gain valuable insights into the current state of the token and make informed decisions moving forward.
Daily Chart
Upon analyzing the daily chart, it becomes evident that a short-term falling wedge pattern had been playing out. From its low on May 12th, INJ experienced a 34% upward movement. However, rather than retracing to its technical target of the April local high, INJ printed a lower high and is now showing signs of descending.
This lower high suggests a potentially negative trajectory, indicating a possible pullback to retest previous resistance levels, which could now act as support. Notably, when the price dips to the range of $4.38 to $3.80, it could present an optimal opportunity to accumulate INJ as the current price of $6.1 is still considered expensive.
A 40% pullback from the current level and a potential 50-60% correction from the local high would be suitable conditions for implementing a dollar-cost averaging strategy.
Daily RSI
Examining the daily RSI, it is evident that INJ has been adhering to an ascending support trend line. Although a temporary fakeout occurred, a subsequent bounce from the trend line was observed, followed by a pullback. The chart’s squeeze between the support and resistance indicates an imminent move, which, given the current market conditions, is unlikely to break to the upside. However, a short-term rally could still occur before an eventual pullback.
Weekly Volume
Analyzing the weekly volume, INJ has experienced a substantial influx of trading activity. Even during a bear market, the volume is reminiscent of the bull market, with larger candles indicating increased demand. This notable volume surge suggests underlying strength for INJ despite the prevailing market conditions.
Weekly Chart
On the weekly chart, an important development emerges as INJ has broken above a significant descending resistance trend line. This trend line had been tested multiple times since 2021, and in 2023, INJ finally surpassed it. What investors should watch for now is a substantial pullback to backtest the support of this descending resistance trend line. Such a backtest would present a perfect entry opportunity for those looking to invest in the token.
Final Thoughts
Considering the ongoing downtrend of INJ, it would be wiser to contemplate a short position rather than a long position. Adopting a cautious approach by waiting for price pullbacks and having funds prepared for substantial declines is a prudent strategy. Through careful analysis of essential technical indicators and patiently identifying optimal entry points, investors can effectively navigate the volatile nature of INJ and make informed investment choices that align with their overall strategies.