Virtuals Protocol [VIRTUAL] has experienced a remarkable rally recently, surging by 155% in just one week. The rapid price increase has been fueled by strong demand, which has allowed VIRTUAL to surpass local resistance levels, drawing attention from traders and investors alike. Despite the current bullish market structure, signs of a potential short-term dip are emerging, as bearish divergence appears on technical indicators, especially the Money Flow Index (MFI).

VIRTUAL’s impressive performance began on April 25th when it broke its downtrend and started climbing, rallying another 56% from its lows. During this time, VIRTUAL’s market conditions were extremely bullish, with the Money Flow Index (MFI) at 89, signaling strong buying activity. The Chaikin Money Flow (CMF) also read +0.18, reflecting a notable influx of capital into the protocol, and the Accumulation/Distribution (A/D) indicator slowly trended higher throughout April, showing increased buying pressure.

VIRTUAL’s price has successfully overcome resistance levels at $1.21 and $1.41, marking key milestones in its recovery. The uptick in transaction count also contributed to a more positive sentiment, which could further encourage investors to step in. However, recent price action on the 4-hour chart suggests that VIRTUAL may be due for a short-term correction, despite the prevailing bullish outlook.

Short-Term Dip Ahead?

Looking at the 4-hour chart, the momentum that pushed VIRTUAL higher in recent days may be slowing down. A bearish divergence is evident, as the MFI has formed lower highs while the price has continued to make higher highs over the past two days. This suggests a potential pullback, with prices likely to drop to the support levels of $1.22 or $1.06.

Despite this, other technical indicators on the 4-hour chart show that bullish conditions remain intact. Both the CMF and A/D indicators indicate continued buying pressure, which means that while a pullback seems likely, it is expected to be short-lived and shallow. The market sentiment remains strong, and a quick recovery is expected after any minor dip.

Additionally, the liquidation heatmap over the past three months reveals that the $1.55-$1.58 range is a key liquidity zone. This indicates that VIRTUAL could continue its upward trajectory towards these levels before encountering significant resistance. Traders should not rush into shorting the token based solely on the bearish divergence observed on the MFI. Instead, waiting for a potential retest of the $1.36 level, which has also shown strong liquidity, could provide an opportunity to enter long positions.

Long-Term Outlook for VIRTUAL

For long-term investors, the $1.60 level stands out as an important price point to monitor. If VIRTUAL can flip this level to support, it would present a solid buying opportunity. From there, the next major resistance levels are at $2 and $2.40, suggesting significant upside potential in the medium-to-long term.

While the current market conditions point toward a potential short-term dip, the overall outlook for VIRTUAL remains bullish. The pullback is likely to be shallow and temporary, with strong buying pressure and a solid liquidity backdrop suggesting that VIRTUAL will continue its upward movement in the near future. For traders, waiting for a dip to key support levels could present an excellent opportunity to capitalize on the continued bullish trend.

Conclusion

In summary, VIRTUAL’s impressive rally has placed it in the spotlight, but the token is now facing a critical juncture. A bearish divergence on the MFI suggests a short-term dip could be on the horizon, with potential support levels at $1.22 and $1.06. However, the underlying bullish trend remains intact, as buying pressure continues to build, and liquidity zones point to further upside potential. For long-term investors, the $1.60 level holds significant importance, and a flip to support could pave the way for a further rally towards $2 and beyond. Patience and strategic entry points will be key for those looking to capitalize on VIRTUAL’s continued growth.