The controversial yet popular DeFi governance token SUSHI may have finally found a clear bottom after reaching the lowest prices since September. Now, technical analysis shows that a SUSHI breakout may be imminent if bulls clear several resistances and finally show their dominance.
Fundamentally, the state of the Sushiswap decentralized protocol has not improved much. In fact, liquidity and trading volume continues to bleed together with the token’s price. Once hosting almost $1.5 billion in liquidity, Sushiswap is back to having only $268 million.
The protocol also reached an ATL for daily trading volumes. Sushiswap Protocol Analytics shows that users trade only $12 million in total volume per day. This is the lowest point this project ever reached. The situation is especially gruesome considering that Uniswap has massively improved over the course of the last month. Sadly, Sushiswap failed to take a significant part of DeFi’s market share and risks to fall to irrelevance.
Nevertheless, even the bearish situation has the chance to turn bullish if the state of the SUSHI governance token improves. Technical analysis shows that we are finally about to discover the true fate of this cryptocurrency.
Will SUSHI become irrelevant or will bulls return to the scene?
Taking a look at the 4H time frame, we can see that there are quite a few levels of resistance and relatively no support. Trading volume falls down, RSI cannot stay above 50 and the price slowly becomes compressed as it reaches lower lows.
But first, let’s define the key issues. Macro-wise, bulls have to show their strength by pushing SUSHI beyond $1.13. This price level served as support in September and flipped into heavy resistance over time. Locally, we have strong resistance at $0.93. Additionally, we formed a descending triangle.
As for support, we have two key price levels. $0.61 temporarily acts as the local support by preventing SUSHI from falling down further. Additionally, we have an ATL acting as support, which can be found at $0.55.
As previously mentioned, volume and RSI are bearish as well. Trading volume resumes descending on all timeframes. RSI grew beyond 50 three times, but bears rejected the level each time.
With all of these data points in mind, how can we know where SUSHI will go next?
Obviously, the bearish case is far stronger. Numerous indicators, along with price action, show that SUSHI is weak. Moreover, the chart formed a descending triangle. This is inherently bearish.
However, we may form a strong bullish case in one specific situation. SUSHI must break out above the top of this descending triangle. In that case, prices may reach up to $0.93, the first resistance level. For this to happen, we need the RSI to finally break 50, volume to start rising, and of course for the price to finally turn bullish. Then, and only then, can we expect medium-term bullish PA.
If traders are unable to push prices up, then it is all but confirmed that bears will dominate the market for a long time. To conclude, this token is extremely bearish for the time being. However, a SUSHI breakout above $0.65 would completely reverse PA.