After YFI prices rose by 100% in less than 3 weeks, Yearn Finance faces a risk of callback

Yearning for Finance (YFI) After rising to close to $42,000 for five consecutive days, it seems to be preparing for a price correction. It is worth noting that the lack of sufficient purchase volume and the risk of overbought are behind the bearish outlook.

YFI price rebound so far

YFI price As traders moved funds out of “top” cryptocurrencies such as Bitcoin, they soared by more than 47% in five days to $41,970 (Bitcoin) And ether (Ethereum) And look for short-term opportunities in the altcoin market.

Yearn Finance is one of the so-called beneficiaries Capital migration, Given that its value to BTC and ETH has risen by nearly 47% and 41.50% in just five days.At the same time, at the core of the sudden emergence of traders Buying interest in YFI market It is a token repurchase program.

Daily price performance of YFI/ETH and YFI/BTC after the announcement of the token repurchase plan. Source: TradingView

On December 16, the Yearn Finance team announced that they had Purchased YFI tokens worth more than USD 7.5 million The average price from the open market is $26,651 per unit. They also revealed additional cash of US$45 million to continue their YFI repurchase boom.

In addition, the Year Finance community also proposed that the YFI Ministry of Finance use part of the token repurchase to reward YFI holders who actively participate in Year Governance.Proposal (full details here) Is currently in the voting stage.

After the announcement of the token repurchase, the YFI price against the US dollar soared by more than 100%.

YFI price correction risk

However, despite the rise, YFI’s trading volume declined, indicating that traders have low confidence in its upward movement.

The daily chart of YFI/USD shows the price-volume divergence. Source: TradingView

Usually, a Bearish divergence The relationship between price and volume leads to a correction or consolidation until the belief increases. Therefore, the possibility of YFI at least suspending its continued price increase is very high, and its daily relative strength index (RSI) has also entered the overbought area above 70, which is a sell signal.

related: After Yearn Finance’s $7.5 million repurchase, the price of YFI rose by 46% in just four days

In addition, the latest price increase of the Year Finance token brings it closer to the known inflection point near $40,000, as shown in the Fibonacci retracement chart in the figure below.

The YFI/USD three-day price chart shows Fibonacci entry and exit levels. Source: TradingView

In detail, the 0.618 Fib line near US$40,113 limits YFI’s intraday upward attempts. The same level helped to prevent Yearn Finance token prices from rising between October and November, which subsequently caused the YFI price to fall to a 12-month low, close to $17,000.

Nevertheless, if the bulls manage to decisively push the YFI price above the 0.618 line, they may also take the token out of the multi-month range defined by approximately $25,500 as support and $40,000 as resistance. In this case, YFI’s next upside target may move towards the 0.5 Fib line near $51,000.

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