Storj (STORJ) has recently encountered a deceleration in its price momentum, which has raised concerns among investors and traders. The cryptocurrency witnessed a surge of 147% in value, within the 37 days starting from a low of $0.218 on September 1 and peaking at a local high of $0.542 on October 9. However it seems that this remarkable rally has encountered obstacles and there are indications suggesting challenges.
The recent price surge in Storj has triggered approximately $20 million in liquidations. Notably, bears in the STORJ market bore the brunt of this development, with $12.40 million in positions being liquidated.
Additionally, the total open interest, representing all active positions, has declined by 35% over the past four weeks and currently stands at around $132 million. This reduction in open interest, coupled with the substantial liquidations, suggests that institutional investors and experienced traders might be positioning for a correction.
One concerning technical aspect is the bearish divergence observed when comparing Storj’s recent price action to the Relative Strength Index (RSI). This divergence typically occurs when an asset experiences upward price movement alongside declining momentum, often heralding an impending correction.
Before any pullback materializes, there’s a possibility of a brief upside spike that could challenge the October 9 swing high at $0.542, potentially luring in early bears. Subsequently, Storj’s price could target the sell-side liquidity clustered around the equal lows at $0.406, signifying a 15% correction.
However, in a more bearish scenario, Storj’s price could descend further and find temporary support around the $0.380 level, which coincides with the midpoint of the range established since early November 2022. In a worst-case scenario marked by a substantial surge in selling pressure, STORJ could drop to the $0.331 support level, constituting a more significant 32% decline.
It’s worth noting that a close of the daily candlestick above the $0.542 level would challenge the prevailing bearish sentiment and could attract sidelined buyers, potentially propelling STORJ to test the buy-side liquidity above the July 5th swing high at $0.554.
Storj faces a critical juncture as its price encounters resistance and potential bearish signals emerge. Traders and investors should exercise caution and closely monitor the cryptocurrency’s performance in the coming days to gauge the direction it may take.
