TAO poised for breakout amid bullish technical signals
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The Key Takeaways:
- TAO (Bittensor) is showing a promising “Cup and Handle” chart pattern, indicating a potential price increase.
- The resistance zone between $720 and $780 is crucial for further development.
- Positive funding rates and increasing spot inflows are supporting the upward trend.
TAO and the “Cup and Handle” Pattern: A Look at the Charts
TAO, also known as Bittensor, has shown impressive price performance in recent weeks. The altcoin is currently just 5.1% below its yearly high of $767.68 (as of April 11, 2024). The price rose by 1.67% within 24 hours to $725.50, accompanied by a trading volume increase of 17.42% to $641.62 million. This momentum is driven by rising trading activity and growing open interest – a sign of increasing market interest.
What is the “Cup and Handle” Pattern?
The “Cup and Handle” pattern is a well-known chart pattern that often signals an upcoming price increase. It consists of two phases: the “Cup” represents a longer accumulation phase, while the “Handle” represents a shorter consolidation phase. For TAO, the “Cup” formed between March and October 2024, followed by the “Handle” in October and November. If TAO breaks the resistance at $780, prices between $1,000 and $2,000 could be possible – depending on the depth of the “Cup.”
Critical Indicators: Resistance and Support Zones
The current resistance zone between $720 and $780 is crucial. Previous price declines in this area indicate a strong hurdle. If TAO fails to break through, a decline to $600–$550 could occur, offering a new entry opportunity. However, technical indicators such as the Stochastic RSI, the Awesome Oscillator, and the Supertrend continue to show a positive trend.
Funding Rates as a Key Indicator
Funding rates, which are the fees for holding long or short positions, are an important indicator of market sentiment. In September 2024, funding rates were negative, indicating bearish sentiment. However, with the recovery of TAO’s price in October, funding rates turned positive. This trend continued through December, supporting the price increase above the $700 mark.
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Spot Inflows Driving the Rally
Another key factor driving TAO’s upward trend is spot inflows – the capital entering the market. Between February and June 2024, significant outflows led to a price decline. However, this trend reversed in October, with spot inflows reaching a peak of over $12 million in November. These capital inflows drove the price from $400 to over $700 and could help TAO break the $800 mark.
Our Assessment
TAO currently shows strong technical and fundamental foundations for further growth. The “Cup and Handle” pattern, positive funding rates, and increasing spot inflows all point to a continuation of the upward trend. However, the resistance zone between $720 and $780 remains crucial. Traders should closely monitor this area, as a breakout could lead to significantly higher prices. At the same time, pullbacks to $600–$550 could present attractive entry points.
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