The price of Yearn.finance (YFI) has been rejected by a long-term resistance line and formed a bearish structure. It may continue to decline in the future.
Descending resistance line
The price of Yearn.finance (YFI) has been trading below a descending resistance Line since reaching an all-time high at $98k in May 2021. During this period, the price reached a low of $4,000 on June 18, 2023.
The price has since increased and retested this resistance line on March 2, 2023. After the initial decline, the price recovered and tested the resistance line again on April 10 (red arrow).
However, it continued to be rejected and experienced a sharp decline afterward. This action has created a bearish structure, showing thatthe bears have the upper hand.
Therefore, the YFI price is likely to continue declining towards a significant horizontal support zone at $5,200, marking a decrease of over 20% from the current level.
The RSI indicator supports this bearish outlook as it drops back below the 50 level.
Daily outlook
The daily chart provides a more optimistic outlook as the price has bounced off the support zone at $6,500 and formed a double bottom pattern. Additionally, this pattern is accompanied by bullish divergence in the RSI indicator. Therefore, a recovery rally may occur afterward.
If so, the YFI price could rise towards the previous support zone at $7,100 before resuming the downtrend.
Conclusion
The most likely prospect suggests that the YFI price will continue to decline towards a significant support zone at $5,200. However, it may experience a short-term recovery before doing so.
The short-term recovery view will be invalidated if the price breaks below the support zone at $6,500.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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