An overnight pump that pushed popular decentralized finance token, YFI, up by 23 percent, has entered a bull trap.
The Yearn Finance governance cryptocurrency fell 10 percent this Friday from its intraday top at $36,043. Its plunge appeared as a part of formal downside correction that typically follows price rallies. Traders apprehensively bought spot YFI at its session low, only to sell the token later at an excellent high.
YFI/USDT plunges lower on profit-taking sentiment. Source: TradingView.com
While the pump-and-dump was purely technical, what transpired the YFI price rally stood firm. Coinbase Pro, one of the world’s leading crypto firms, announced Thursday that it is going to list YFI-enabled trading pairs on its platform from next week.
“On Monday, September 14, we will begin accepting inbound transfers of YFI to Coinbase Pro,” the platform announced. “Trading will begin on or after 9 AM Pacific Time (PT) Tuesday, September 15, if liquidity conditions are met.
In response, the DeFi token jumped from $29,000 to $35,000 within a few hours of trading. Listing on Coinbase Pro typically leaves cryptocurrencies under a bullish spell. It is because the platform opens them to a market with better fiat liquidity, which includes smooth conversions between the tokens and national currencies like the US dollar, euro, and pound.
A listing on Coinbase also quasi-certify cryptocurrencies as genuine in the eyes of the US traders. That serves as a big plus, especially for emerging tokens like YFI that have limited exposure to the mainstream finance market.”
YFI Technical Outlook
Technically, YFI/USD was testing $31,993 as support and 35,070 as resistance. The pair, for the time being, hints to consolidate sideways withing this $4,000 range. Meanwhile, prospects of Coinbase listing could help YFI sustain above the support level.
That could allow traders to put a long position towards $35,000 for a short-term profit, providing they also maintain a stop-loss target below the point of their entry. Meanwhile, a successful break above $35,000 would extend the upside target towards $38,990 (~$40,000).
On the other hand, if a downside sentiment across the cryptocurrency market persists, then traders may use their gains in the YFI market to offset losses elsewhere. That amounts to an extended bearish correction below the $35,000-support.
Should that happen, the first downside target traders may watch sits near $29,831. A further breakdown and traders could extend their short position towards the green wave in the chart above. That is the 20-period moving average curve.
let's see if clones follow pic.twitter.com/RjxLLcKK1Z
— Mac ❄️🐺 (@MacnBTC) September 10, 2020
YFI was trading near $32,000 at the time of this writing.