dYdX is currently experiencing a recovery push amid increased buying pressure, although a cluster of sell orders threatens its potential for further rise. Over the past 24 hours, dYdX has increased by 4%, making it the top gainer among the top 100 cryptocurrencies. This marks its third consecutive day of intraday gains after a period of consolidation due to the broader market’s bearish trend.

dYdX had previously experienced a sharp 7% drop on July 23, following reports that the exchange’s website had been compromised. As of now, dYdX is trading at $1.127, up 2.07% this morning.

Technical Analysis of dYdX

Data from the daily chart indicates that since July 26, dYdX has been forming a rounding bottom pattern, a favorable reversal signal suggesting a potential shift in market sentiment. This formation indicates that the prolonged downtrend might be nearing its end, with buyers gradually gaining control. However, dYdX is approaching a multi-week descending trendline that has served as a formidable resistance.

To confirm a breakout and signal a more substantial bullish reversal, dYdX must close above the psychologically significant level of $1.60. Adding to the bullish outlook, the Moving Average Convergence Divergence (MACD) indicator on the daily chart shows signs of strengthening momentum. The MACD line (-0.043) has crossed above the signal line (-0.066).

“dYdX must close above $1.60 to confirm a breakout and signal a more substantial bullish reversal.”

Challenges Ahead for dYdX

The road ahead for dYdX is not without challenges, as indicated by the asset’s market depth. While the average bid price is $1.04, the average ask price is higher at $1.11, indicating that sellers are willing to offload their positions at a premium.

There is substantial resistance above the current price. Sell orders accumulate significantly as the price approaches and surpasses $1.20, with a particularly dense cluster at $1.30 and beyond. Market depth data also reveals that at levels 10% and 20% above the current price, sell orders dominate, with volumes of 4.08 million dYdX and 4.97 million dYdX, respectively.

This suggests that even if dYdX breaches the $1.20 mark, it could face increased selling pressure, potentially capping further gains unless strong buying interest emerges.

Support Levels for dYdX

On the downside, dYdX is supported by significant buy orders below the $1.10 level, with notable volumes at $1.00 and $0.90, where large bids could prevent a steep decline. This safety net could provide the necessary support for dYdX to consolidate before attempting another push higher.

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