eCash [XEC] saw a dominant surge in price, with a rally of 13% at press time. Several factors have influenced the gains. On the fundamental side, the payment network is making moves to update its consensus rules.
Other bullish indicators have emerged from the capital flowing into XEC more recently. However, there is still a major hurdle ahead that could limit the price rally. In fact, the chart data suggests that the asset may be overvalued.
XEC faces resistance despite bullish momentum
Analysis of XEC’s price action using the Bollinger Bands chart shows that the asset has traded into overvalued territory, based on the Bollinger Bands indicator.
The Bollinger Bands operate on three levels, the upper level (red band), the middle level, and the lower level (green band). The upper band indicates resistance when an asset becomes overvalued, while the lower band provides support when the asset becomes undervalued.
XEC traded into the upper zone in the early hours of October 25 and has since seen a minor pullback to the press-time level of $0.000073.
Yet, there is still a tendency for the price to make further upward moves, potentially testing the upper band again. This outlook is based on the Money Flow Index (MFI) indicator.
The MFI tells traders when there is capital inflow or outflow from an asset. A reading between 50 and 80 suggests more inflow and indicates that traders are buying, while a reading between 20 and 50 suggests an outflow of capital from the market.
Presently, the MFI has a reading of 66.96 on the chart, implying that more capital is still flowing into XEC, which could add to the existing momentum.
Spot buying supports XEC’s rally
The capital inflow that has benefited the XEC rally did not begin this way. The early hours of trading suggests that there was more selling in the market than buying.
Data from CoinGlass shows that while XEC saw a surge in the early hours of the day, traders in the market sold a significant portion of it, with roughly $92,000 sold.
In the past eight hours until press time, however, the Spot Netflow has since turned negative, with a reading of -$50,000 at the time of the analysis. When there is a shift from bearish to bullish conditions, it often implies growing interest among traders in holding the asset for longer.
Notably, over the past 24 hours, there has been more selling than buying, with a Netflow of $85.
Given the more recent buying activity over the past 8 hours, there is a high chance that the asset will see further growth in bullish buying activity in the market.
Negative Funding Rate raises downside risks
Funding Rate data shows a growing warning of a potential price decline as the rate becomes extremely negative.
According to CoinGlass data, the Funding Rate has plummeted to -0.7289%, indicating that most traders are holding short positions.
The growth in aggressive shorting implies that there is a high chance the price will decline in the near term, potentially liquidating over-exposed buy positions in the market.
Final Summary
- XEC rallied 13% as the Money Flow Index reached 74.5, indicating continued capital inflows despite overbought conditions.
- The Funding Rate fell to -0.7289%, raising the risk of a price decline as short positions increased.