NOIDA (CoinChapter.com) — SUI recently witnessed a sharp rally, mostly riding on the coattails of the wider crypto market’s bullishness. Bitcoin and Ethereum’s price spikes ignited optimism, encouraging traders to rotate capital into altcoins like SUI.
Beyond market-wide factors, SUI also benefited from increasing adoption in its ecosystem, with growing Total Value Locked (TVL) on its network. However, while these developments signal growth, technical indicators hint at an impending correction.
Overbought conditions on key timeframes and rejection at a critical Fibonacci resistance level suggest SUI could face a significant downturn. As bearish signals grow stronger, investors should remain cautious.
SUI’s Overheated Technicals Suggest Imminent Crash
SUI’s recent price action highlights vulnerabilities in its bullish structure. The token has climbed within an ‘ascending channel‘ but faces critical resistance around the $4 price mark, near the pattern’s upper trendline resistance. The pattern’s resistance trendline has again rejected the token’s rally, priming SUI for a prime crash soon.
Moreover, the Relative Strength Index (RSI) confirms overbought conditions, with values exceeding 70 on both daily and weekly timeframes. Such RSI levels often precede corrections, as they signal overvaluation and waning bullish momentum.
The SUI USD pair might crash after its recent rejection at the channel’s resistance. Source: TradingviewHence, traders perceive overbought RSI levels as selling signals, which could increase the selling pressure and result in a price crash for the SUI token.
Adding to the bearish outlook, trading volume has not supported the recent uptrend. A lack of significant volume suggests buyer exhaustion, leaving the price vulnerable to downward pressure.
SUI OI-weighted funding rate. Source: CoinglassMeanwhile, a declining funding rate points to growing bearish sentiment, with more traders betting on price drops. Flat open interest further confirms indecision in the market, indicating a lack of new liquidity to sustain upward momentum.
A downtrend from here would likely see SUI price test the 1.618 FIB level near $3.15 as support. Moreover, failure of the immediate support level might force the token to drop to the pattern’s support trendline, resulting in a drop of nearly 32% from current levels.
Furthermore, a break below the ascending channel would likely accelerate the downturn, with potential targets near $2.13. Conversely, failure to maintain support near $3.15 could trigger further selling pressure.
SUI’s bullish narrative remains at risk as technical indicators increasingly favor a bearish scenario. As such, traders are likely to remain cautious and enter the market only after a SUI price action sends clear signals of its direction, likely deflating the token’s bullishness.
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