Loopring: LRC bulls looking to defend a crucial support area but…

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice

Bitcoin’s losses since April have had a strong impact on the price action of Loopring. Loopring was trading above $1 in March 2022, but it was quickly forced to cede all the territory gained in March back to the bears.

At press time, LRC was trading 64% lower than the March peak, and further losses can be anticipated in the weeks to come as Bitcoin showed signs of weakness at the $30k mark.

LRC- 1 Day Chart

Source: LRC/USDT on TradingView

In January 2022, Bitcoin dropped from $45k to $35.5k, and at the same time, LRC dropped to test the $0.67 support level. In the weeks since then, the price tested this level multiple times and finally slipped beneath it in May.

Despite the strong gains registered in March, demand dried up and the price set a series of lower highs thereafter. At press time, both the $0.84 and $0.67 levels were broken as support, and LRC dropped another 40% to test the $0.388 support level.

Trading volume has been low in the past week, and the week before saw heavy selling. LRC appeared to be in a downtrend, and a phase of accumulation did not seem to have been initiated. For the bulls, the $0.4 level would be of vital importance to defend and stabilize the price, before an eventual push higher.

Rationale

Source: LRC/USDT on TradingView

The RSI stood at 38, and it has been below the neutral 50 level since April. In the past few months, the 38.7 level has been important, and it remains to be seen if the RSI can push past it. Such a move would signal a weakening bearish momentum.

The Awesome Oscillator has made a series of lower lows in the past few weeks, but in the past few days, it has registered green bars on its histogram. Once again this was a sign of a pullback and weakening bearish momentum. However, it remained well below the zero line to highlight the recent bearish pressure.

The OBV was above a level of support from mid-March, but if the OBV slips below this level, another leg down could materialize. The CMF was also below the -0.05 mark to show that the sellers were dominant in the market.

Conclusion

The steady downtrend was unbroken for LRC since April, and long-term investors would want to see signs of accumulation before they can look to buy Loopring. Such a phase of accumulation was not yet in play though.