An analyst explained how Arbitrum could see an upside of around 46% if the price were to break out of this technical analysis pattern.
Arbitrum recently traded in a descending triangle
In a new after on The “Descending Triangle” refers to a technical analysis (TA) formation that, as the name suggests, looks like a downward sloping triangle.
The pattern includes two trend lines between which the assets consolidate: a higher level drawn by connecting lower highs in price, and a lower level parallel to the time axis connecting the lows. As with many other TA patterns, the upper line is considered a point of likely resistance for the price, while the lower one can act as support.
Breaking any of these lines could imply a continuation of the trend in that direction. A breakout above the triangle is obviously a bullish signal, while a decline below it can portend a bearish outcome.
Similar to the descending triangle, there is also another pattern called the ascending triangle, which occurs when consolidation occurs in the direction of an overall uptrend.
Here is the chart shared by the analyst showing the descending triangle that Arbitrum’s 4-hour price has been trading in over the past few months:
As shown in the chart above, the Arbitrum 4-hour price retested the upper level of the descending triangle a few days ago, but was rejected as it has since plunged lower.
Yesterday the coin underwent a very short retest of the lower line, but it seems that this level also applies to the cryptocurrency as its price has undergone a recovery.
However, it is likely that these levels will not hold for long as ARB is quickly approaching the apex of the triangle. As the range decreases, the chance of a breakout (in either direction) increases.
Currently, Arbitrum is trading right in the middle of the two levels, so it is uncertain which level it will travel to next. Martinez notes that if the breakout happens on the upside, the cryptocurrency could ultimately see an increase of around 46%. This figure is based on the fact that the height of the triangle causes a price fluctuation of this percentage.
It only remains to be seen whether ARB could find a break above the descending triangle or not.
ARB Award
At the time of writing, Arbitrum is trading around $0.72, up 1% in the last 24 hours.
