VIRTUAL Eyes $1.33: Important Levels for Traders to Monitor

The cryptocurrency sector focusing on artificial intelligence (AI) tokens has faced significant losses recently, with many top tokens taking a hit over the past week. Among these, Virtuals Protocol (VIRTUAL) has dropped by 15.71%. Despite these downturns, analysts suggest that the current dip could represent a buying opportunity for traders.

Key Takeaways

The AI token market has experienced substantial losses recently, with VIRTUAL dropping 15.71% over the past week.
Technical analysis indicates that the current price pullback may be a healthy retracement.
Critical price levels to watch include the $0.73-$0.76 demand zone and the $0.758 retracement level.
Traders could see a potential rebound targeting prices of $1.19 and $1.33.

AI token sell-off deepens, but here's why VIRTUAL’s retracement is healthy

Current Market Context

The AI cryptocurrency sector has suffered a significant decline, with leading tokens, as reported by CoinMarketCap, showing notable losses over the last week. With the exception of Story [IP] (which saw a decline of 7.53%), the other top ten tokens have experienced double-digit percentage losses, with Artificial Superintelligence Alliance [FET] being the hardest hit at -16.84%.

VIRTUAL has also faced challenges, with a decrease of 15.71% over the week. However, from a technical analysis viewpoint, this pullback could be beneficial.

Is This a Buying Opportunity?

VIRTUAL 1-day Chart

Source: VIRTUAL/USDT on TradingView

The 1-day chart has shown a significant retracement following a quick rise to $1.19 earlier this month. AMBCrypto previously forecasted a potential drop towards $0.75, identifying the $0.73-$0.76 range as a crucial demand area. This remains relevant today, despite recent bearish momentum and capital outflows in the market.

The price has dipped below both the 20 and 50-day moving averages, while the Chaikin Money Flow (CMF) indicator suggests heavy capital leaving the market by dropping below -0.05.

Exchange Flows Indicate Bearish Sentiment

VIRTUAL Exchange Netflows

Source: Glassnode

In addition to technical signals, the exchange netflows provide insight into market behavior and currently favor sellers. Over the past six months, exchange flows (7-day moving average) have shown mostly positive trends, punctuated by short periods of outflows, including notable instances in August, November, and just recently.

This bearish stance indicates that holders are sending VIRTUAL tokens to exchanges more frequently, pointing to dwindling market confidence.

Time for Traders to Buy?

While netflows and market indicators can offer insight, observing price action is often more reliable. VIRTUAL's breakout in early January, surpassing the $0.73 and $1.05 resistance levels from a prolonged downward trend, reflects a positive market intent.

As long as the critical 78.6% retracement level at $0.758 remains intact, swing traders can uphold a bullish outlook. This current dip could represent an opportunity for buying, with targets set at $1.19 and $1.33.

Final Thoughts

Disclaimer: The information provided in this article does not serve as financial, investment, or trading advice and represents only the writer's viewpoint.