MakerDAO (MKR) could be on the verge of a massive correction following an impressive 173% bullish run, a technical analyst warns.
Renowned trader Ali Martinez has sounded the alarm for MakerDAO (MKR) investors, pinpointing a significant sell signal on the weekly chart following an impressive 173% bullish surge.
In a post on X, Martinez highlighted that the TD Sequential indicator had signaled a potential downturn for MKR, with a warning of a weekly close below $1,163, possibly leading to a corrective move down to either $1,037 or $935.
— Ali (@ali_charts) August 16, 2023
The TD Sequential identifies potential trend reversals and exhaustion points. This signal, if validated, suggests that the recent bullish momentum could be losing steam, prompting traders and investors to exercise caution.
The 100-weekly moving average at $1,295 has been indicated as a critical level to watch. Ali asserted that if MKR manages to close above this level, it might invalidate the bearish scenario proposed by the indicator.
MKR’s Rollercoaster Ride
Notably, this downtrend follows the considerable gains MKR secured during June and July. The combined increase of 78.19% over these two months underscored MKR’s market potential to embark on solo rallies.
Interestingly, MakerDAO was already on a bullish run when XRP received legal clarity from Judge Torres’ ruling. The ensuing bullish market-wide sentiments compounded MKR’s rally. MKR rallied from a low of $511 on June 10 to a 15-month high of $1,370 on August 8.
Regrettably for investors, the euphoria ended shortly after the recent high. MKR immediately witnessed a downward trajectory after hitting the $1,370 peak, which has persisted over the past two weeks. However, some traders have already begun placing short positions amid the drop.
MKR has experienced a notable decline of 4% in the past week, with a significant 5.11% drop occurring just today. This downtrend comes on the heels of an elongated consolidation phase observed last week.
MakerDAO has continued to battle the bears, hedging against any significant drops. However, August has proven challenging for the asset as it has registered a 4.89% decline. MakerDAO is trading for $1,168 at the time of reporting.