Sui (SUI) has been facing significant challenges as it attempts to reverse its recent downtrend. The cryptocurrency is forming an inverse head and shoulders pattern, which is traditionally a bullish reversal signal that usually occurs after an extended period of price decline. However, despite this potentially positive setup, SUI is struggling to break above the critical $2.52 resistance level, leaving the short-term market outlook uncertain.

The Inverse Head and Shoulders Pattern

The inverse head and shoulders pattern that is forming on SUI’s price chart is a classic indicator of a potential bullish reversal. This pattern typically signals the end of a downtrend and the beginning of an upward move. In this case, SUI has bounced from the $2.20 support zone, with the left and right shoulders aligning near $2.25, creating a strong demand level.

The key to confirming the pattern, however, is for SUI to break and hold above the $2.52 neckline. This resistance has proved difficult to overcome, even as the cryptocurrency attempts to gather momentum for a potential breakout. If SUI can break above this level with strong volume, it could signal a shift in market sentiment, favoring the bulls. However, unless this happens, the bearish momentum remains dominant, and the risk of further downside increases.

Bearish Momentum and Short-Term Outlook

At the time of writing, SUI is trading at $2.22, down 8.73% in the past 24 hours, indicating that sellers are still firmly in control of the market. Despite the bullish reversal potential suggested by the inverse head and shoulders pattern, the broader market indicators are still showing bearish signals. The MACD, a commonly used indicator to measure momentum, is slowly curling upward, suggesting a possible shift in momentum. However, it remains in bearish territory, highlighting the ongoing control of sellers in the short term.

Moreover, Fibonacci retracement levels reveal a significant support zone between $2.16 and $2.22, which SUI is currently testing. If the price fails to hold above this level, it could expose SUI to further downside risk, with the next major support located at the 1.618 Fibonacci extension near $1.42. This level could act as the next target if the bearish momentum persists and a breakout above $2.52 doesn’t occur.

Liquidation Data and Market Sentiment

Liquidation data further emphasizes the ongoing dominance of the bears. On April 3rd, long liquidations on SUI hit $1.92 million, significantly outweighing short liquidations, which totaled $675.78K. This indicates that many bulls have been overexposed, and recent price drops have likely forced out weak hands. The surge in long liquidations could also suggest that the market has reset, allowing stronger hands to re-enter.

The OI-Weighted Funding Rate, another key market indicator, recently turned slightly negative at -0.0056%. This shift suggests that short positions are more dominant, and traders are adopting a cautious stance. However, the Funding Rate remains close to neutral, indicating indecision in the market. Sentiment could quickly change if price action confirms a breakout above $2.52, signaling a potential trend reversal.

Conclusion: Waiting for Confirmation

SUI is currently under strong bearish momentum despite the potential bullish reversal indicated by the inverse head and shoulders pattern. The price is yet to break and hold above the crucial $2.52 neckline, which is necessary to confirm a trend reversal. Until that happens, the short-term outlook remains dominated by sellers, and the downside risk toward $2.16 or even $1.42 still looms large.

While there is potential for a bullish reversal, confirmation above $2.52 is essential for the market to turn in favor of the bulls. Without this confirmation, the current bearish sentiment will likely continue to weigh on SUI’s price in the near term. Therefore, investors should stay cautious and await a clear breakout before considering a more optimistic outlook for SUI.