Technical Analysis: Yearn.finance (YFI) Shows Signs Of Strength, Price Could Skyrocket In The Near Term
The price of Yearn.finance’s native token, YFI, is fast approaching a significant long-term resistance level, which, if breached, could signal the start of a new uptrend. Yearn.Finance is a suite of decentralized finance (DeFi) products on the Ethereum blockchain that provides lending/borrowing, yield and cover.
Descending resistance line
Since reaching its all-time high of $98k in May 2021, YFI’s price has fallen below a descending resistance line, dropping as low as $4k on June 18, 2023. However, since then, the price has been on the rise, and on March 2, 2023, it retested the resistance line.
Despite the rejection, the price made a higher low, indicating that the downtrend has weakened. Furthermore, the Relative Strength Index (RSI) has created a bullish divergence and is above 50, suggesting that YFI will likely retest the long-term resistance line and break out afterward.
Short-term outlook
Looking at the daily chart, a bullish continuation seems likely as well. After being rejected by the long-term $11.5k resistance area, YFI retested the $6.5k-$7k horizontal support area, and the strong bounce that followed indicated strong demand at lower levels.
This move also confirmed the bullish divergence in the RSI and helped the price reclaim the horizontal support at $8k, which also coincides with the 0.5-0.618 Fibonacci retracement support area of the recent increase.
Consequently, YFI is likely to turn up from this zone in the next few days, rallying to the recent high at $9.6k and potentially breaking above it to the long-term resistance area at $11.5k.
However, if the price breaks below the $8k zone, it will head back down toward the $6.5k-$7k support area.
In conclusion, the most likely scenario is that YFI will recover soon, with short-term targets set at $9.6k and $11.5k. A breakout of the $11.5k zone will confirm a bullish reversal, and a failure to stay above the $6.5k-$7k zone will invalidate this view.
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