The price of Binance Coin (BNB) is showing signs of a potential significant correction, with technical indicators suggesting a possible 30% drop. This comes as the cryptocurrency faces rejection at a key resistance level, forming a bearish chart pattern, and as its parent exchange, Binance, experiences substantial user withdrawals.
Key Takeaways
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BNB's price action has formed a "double top" pattern, indicating potential trend exhaustion.
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This pattern suggests a possible 30% correction, targeting around $835.
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Binance has seen the largest weekly outflows among centralized exchanges, raising concerns.
Double Top Setup Signals Bearish Outlook
BNB has encountered resistance near the $1,350-$1,375 range on its daily chart, failing to break through this level on two occasions recently. This price action has formed a classic "double top" pattern, a technical signal often associated with trend reversals and potential downside. The pattern's neckline support is identified around $1,100. A decisive break below this level could confirm the double top and trigger a sell-off.
The projected downside target, based on the pattern's height, points to approximately $835, implying a roughly 30% decrease from current levels. Momentum indicators are also flashing caution. The daily Relative Strength Index (RSI) has moved out of overbought territory, and the Moving Average Convergence Divergence (MACD) lines have shown a bearish crossover, suggesting fading buying strength.
Binance Outflows Add to BNB's Woes
Adding to the technical concerns, Binance has experienced significant user withdrawals. Over the past week, the exchange saw outflows totaling $21.75 billion, with one day alone witnessing $4.1 billion in withdrawals. This exodus followed a recent liquidation crisis triggered by mispriced collateral assets on the platform. While daily outflows have since eased, the seven-day balance remains negative.
Some analysts speculate that the liquidation event may have been a targeted exploit of Binance's margin system, with potential losses ranging from $500 million to $1 billion. These events have seemingly shaken investor confidence, coinciding with BNB's price rejections.
Potential for a Bullish Reversal
Despite the bearish signals, there remains a possibility for BNB bulls to regain control. The cryptocurrency is currently trading above key Exponential Moving Average (EMA) supports, including the 20-day EMA near $1,155 and the 50-day EMA around $1,042. A rebound from these levels, establishing them as new support, could invalidate the double top pattern. If this occurs, BNB could potentially resume its upward trajectory and explore price discovery above the $1,350 level.
Sources
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‘Double Top’ Setup Warns of 30% Price Drop in October, Cointelegraph.
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