OMG Network, formerly known as OmiseGo, stole the crypto spotlight after the price of its native token, OMG, shot up nearly 70% in the past 40 hours. The spike in the buying pressure behind this altcoin was significant enough to send it from a low of $1.90 to a new yearly high of $3.30.
Despite the recent gains posted, a particular technical indicator suggests that the scaling solutions token is poised to pull back.
OMG Reaches Overheated Territory
The Tom Demark (TD) Sequential indicator has proven to be essential in determining OMG’s price action. This technical index was able to predict the most significant exhaustion points on this altcoin’s 1-day chart over the last six months.
In mid-February, for instance, when the OMG Network rose to a high of $1.46, the TD setup presented a sell signal in the form of a green nine candlestick. Following the bearish formation, this cryptocurrency went through a massive bearish impulse that saw its price plummet over 75%.
The TD Sequential index was also able to accurately estimate that BTC was reaching an overbought territory on Apr. 8 and May 1. After these sell signals were given, the scaling solutions token plunged 18% and 17.6%, respectively.
Now, this indicator is once again suggesting that OMG is poised to correct despite the massive gains posted recently.
The TD Index Estimates OMG Is Poised to Retrace. (Source: TradingView)
Stiff Support Ahead
In the event of a correction, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model reveals that there is only one considerable support wall underneath OMG Network that could prevent it from dropping further.
Based on this on-chain metric, over 110 addresses had previously purchased over more than 5 million OMG around $2.80. This supply barrier could have the ability to reject any downward price movement because holders within this range would likely try to remain profitable in their long positions. They may even buy more tokens to allow prices to rebound
Moving past it, however, leaves the value transfer altcoin open to drop to the next significant area of interest around $2.40 to $2.60.
OMG Faces Weak Resistance Ahead. (Source: IntoTheBlock)
On the flip side, the IOMAP cohorts show that a there is not any supply barrier ahead of this altcoin that could prevent it from advancing further. Indeed, the most important resistance ahead of it lies around $3.30. Here, nearly 1,300 addresses bought over more than 750,000 OMG.
Given the current market conditions, investors must implement a robust risk management strategy when trading OMG. Even though everything seems to point out that this token is poised to retrace, the lack of any important resistance ahead suggests that it could have more room to go up.
Featured Image by Depositphotos Price tags: omgusd, omgbtc Chart from TradingView.com