RUNE crashed 20% from highs - More downside ahead?

The support zone between $5.20-5.40 is now being tested, with a break below this key area potentially triggering further downside towards $4.60. While indicators have cooled off on shorter timeframes, RUNE remains overbought on larger time horizons. 

The bears now have control following RUNE's breakdown; will the bulls be able to step back in to regain control?

TLDR

• RUNE crashed 20% from highs, testing key support zone.
• A break below $5.20-5.40 could open the path to $4.60.
• Indicators are overbought on larger timeframes.
• With open interest still elevated but positioning balanced, the risk seems skewed to the downside for Rune in the short term. 

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

RUNE 12hr

Technical analysis

There has been an ugly price action for RUNE over the past few days, but one we called perfectly. 

• RUNE began to look toppy when it ran into the horizontal resistance of $6.53 last week.  
• On the daily timeframe, there were multiple divergences along with all major timeframes in majorly overbought territory. Open interest had soared, and funding rates were massively positive. The market was too confident in an up-only sentiment. Hence, we took the other side of the trade. Since then, price has pulled back 20%. 
• Now the price has reset, RUNE is testing the support level of $5.20 to $5.40. If this area doesn’t hold, then the next level is likely $4.60.
• On the smaller timeframes and even up to the daily timeframe, the RSIs have reset somewhat and are out of overbought territory. The 3D and the weekly remain well overbought, though. 

Market mechanics

The futures market remains somewhat overheated, but RUNE is another where longs and shorts are again in a more even balance. 

• The open interest remains high and looks as if it needs a further pullback. 
• The OI-weighted funding rate has reset to 0.01%, indicating a slight bias to be long, but longs and shorts are in much better balance. Neither longs nor shorts are too overweight currently.
• The long/short ratio is at 0.9845, so more participants have moved into shorts in the past 24 hours, but this is not enough for us to be concerned here. 

Cryptonary’s take

From a mechanics point of view, a flush-out may still be on the cards, but longs and shorts are in a more even balance, so it’s hard to know in which direction this flush-out may come from.

From the technical analysis perspective, we still see RUNE as potentially having further downside, even if that means there is a slight pop higher in the very short term. 

We’re not interested in taking our fresh trades, having shorted RUNE from $6.50’s down to $5.30’s. We may look to DCA into RUNE sub $4.50. However, we will reassess if/when price reaches this level.