Pi Coin: Hidden bullish divergence - Can the bulls turn the tables to regain 0.6 USD?

Pi Coin is currently facing the risk of a fall; however, the hidden divergence between its momentum and value reveals contrarian signals.

In the context of a significant influx of capital into exchanges, along with investors shifting towards short selling, a potential reversal pattern is gradually forming.

Pi Coin reserves on exchanges increase sharply

In the past two months, the reserves of Pi Coin on trading platforms have seen a significant increase, especially with the recent spikes, indicating that large amounts of capital are flowing into the exchanges. This is often a signal that investors are preparing to sell, rather than continuing to hold the asset.

The latest data indicates that net inflows into major exchanges significantly outperform outflows. This serves as a clear warning to the buying side, which could lead to undesirable volatility in the short term.

CEX's capital flow can affect the price of Pi Coin | Source: PiScan## Funding rate is still negative

The funding rate for Pi Coin's perpetual contracts remains negative, an indicator that traders are primarily focused on short positions, while having to pay a fee to maintain their bearish positions. This is a sign that the market sentiment is highly pessimistic, with the downtrend prevailing.

The funding rate of PI and short-term trend | Source: CoinglassThe funding rate reflects the cost of maintaining Long positions compared to Short positions in perpetual contracts. A negative index indicates that traders are primarily Short and are willing to pay fees to maintain exposure to a bearish market. This not only indicates the weak optimism of the bulls but also reinforces the dominance of the bears in the short-term trend.

The bulls are at a disadvantage, but have not surrendered.

The Elder Ray index paints a complex picture of the market. The bulls remain silent, while Bear Power continues to show up with consistent red bars. However, these bars do not show a spike, which may indicate a stable trend, but not entirely negative – there is still a slight optimism that exists.

Bull-Bear Power Index and Its Impact on Pi Coin Price | Source: TradingViewElder Ray Index, used to measure the strength of the buyers and sellers by comparing price action with the exponential moving average, shows that buyers are struggling to maintain upward momentum. However, the absence of strong rallies reflects the current stalemate, rather than signaling a collapse.

Although the situation has not shown clear signs of a breakthrough, the fact that the market has not completely fallen into a deep decline may indicate that the bulls still have a glimmer of hope, albeit weak.

Hidden bullish divergence: A fragile hope for the bulls

A glimmer of optimism for Pi Coin comes from the Relative Strength Index (RSI). While the price of Pi continues to set new lower lows, the RSI is painting higher lows. This is a hidden bullish divergence, a textbook sign that selling pressure is gradually weakening, even though the price has yet to reflect this change.

RSI divergence and its impact on Pi Coin price | Source: TradingViewThe RSI index measures momentum and is often used to identify potential trends. When the price falls but the RSI rises, this is a sign of a hidden bullish divergence, indicating a potential reversal. If this divergence continues to develop, the next key resistance levels for the Pi Coin price will be $0.47 and $0.51. A strong breakthrough through these levels could open up opportunities for the price to reach $0.6.

In addition, the Fibonacci indicator, calculated from the highest and lowest points of significant oscillation periods, provides additional resistance levels at $0.5, $0.53, and $0.56.

The important resistance level for Pi Coin price | Source: TradingViewThis forecast is based on Fibonacci retracement levels, reflecting potential support and resistance zones. However, if the price falls sharply below the support level of $0.4, the entire bullish scenario will collapse, and Pi Coin may enter a deeper correction phase. This event will be a significant warning for investors pursuing a short-term bullish strategy.

Emma