Bittensor (TAO) has recently made a strong move in the cryptocurrency market, posting a 6.5% increase over the past week. However, this upward momentum has been met with a corrective pullback of 6.6% in the last few days, signaling a potential shift in market sentiment. Despite this, TAO’s market capitalization remains just below $4 billion, and it still holds important support levels above $440. However, technical indicators suggest weakening trend strength and rising bearish momentum, leaving the future direction of TAO uncertain.

Bearish Momentum and Weakening Trend

The Directional Movement Index (DMI) for TAO shows a noticeable weakening trend. The Average Directional Index (ADX), which measures the strength of a trend, has sharply dropped from 47 to 23.16 in just three days. The ADX values range from 0 to 100, with values above 25 suggesting a strong trend and values below 20 indicating a weak market or consolidation. The current ADX reading of 23 indicates a lack of clear trend strength, suggesting that TAO is entering a period of indecision.

The decline in bullish momentum is also reflected in the +DI (Positive Directional Indicator), which has dropped from 23.87 to 17.41. Meanwhile, the -DI (Negative Directional Indicator) has increased from 17.86 to 23.15, signaling that bearish forces are beginning to dominate the market. The crossover between the +DI and -DI, with the latter overtaking the former, indicates that sellers are taking control, which could signal a continued downward trend if the momentum doesn’t shift.

RSI Signals Indecision

The Relative Strength Index (RSI) for TAO is currently at 48.46, after experiencing significant volatility in the last 24 hours. The RSI measures the speed and magnitude of price changes, with readings above 70 indicating overbought conditions and those below 30 indicating oversold conditions. Typically, an RSI between 30 and 70 suggests a neutral market. The recent drop in the RSI from 53.82 to as low as 35.25 indicated stronger selling pressure, although the subsequent recovery above 35 points to some buying interest returning.

However, the failure of the RSI to break above the neutral 50 mark suggests that the bullish momentum remains weak. This period of consolidation, with the RSI hovering around 48, reflects market indecision, where neither the bulls nor the bears are gaining full control. If the RSI fails to break above 50, it could signal that the market sentiment remains largely neutral or bearish. On the other hand, a move towards 30 would heighten the risk of a deeper pullback.

Support Levels and Potential Price Movements

Despite the weakened momentum, TAO has shown resilience, bouncing off its key support level around $417.6 and holding above the $440 mark. This support level will be critical in determining TAO’s next move. If the price manages to stay above these levels, it could potentially regain bullish momentum and target the $492.79 resistance area, recovering some of its recent losses.

However, if TAO fails to hold above the support levels of $434 and $417.6, it could enter a more bearish phase. A break below these levels would likely see the price continue its downward trajectory, possibly approaching the $380 range. Such a dip would take TAO below the $400 mark for the first time in about a week, signaling further weakness in the market.

The current market structure, reflected in TAO’s exponential moving averages (EMA), still leans towards a bullish outlook, with short-term moving averages positioned above the longer-term ones. However, the narrowing gap between these moving averages suggests that momentum is fading. If selling pressure returns, the bullish structure could break, leading to a deeper decline in price.

What’s Next for Bittensor?

TAO’s recent performance highlights the uncertainty currently surrounding the cryptocurrency. While the coin has shown potential with a 6.5% gain in the past week, it now faces a crucial test in maintaining key support levels. The weakening trend strength and rising bearish momentum suggest that the next few days could determine whether TAO continues its recent recovery or faces a deeper decline.

Investors will be closely monitoring TAO’s ability to hold above the critical $440 support level. A failure to maintain this price point could signal a shift in market sentiment, leading to further declines. Conversely, if bulls can regain control and push the RSI above the 50 mark, TAO could potentially challenge the $492.79 resistance level and resume its upward movement.

In conclusion, while Bittensor (TAO) has shown resilience after its recent rise, the current market conditions point to a period of indecision. The coming days will be pivotal for the cryptocurrency, as its ability to hold support and regain momentum will shape its future direction in the market.