FLOKI Faces the Risk of a Massive Price Decline After Trending Upward for a Month and Gaining 40%

After trending upward for a month and gaining 40%, Floki [FLOKI] has failed to maintain that trajectory in the following trading sessions.

Floki [FLOKI] has failed to sustain its bullish momentum after trending 40% upward over the past month. Over the last seven days, the token is down 9.99%, although it managed a slight 0.36% gain in the last 24 hours.

However, further analysis shows that a major selling wave could be approaching, which will likely push FLOKI into a deeper decline.

What does analysis show about FLOKI?

After reaching a high of $1.5 on January 12, FLOKI faced strong selling pressure that pushed the token down to $0.9.

Despite this, the token encountered another round of buying volume at lower prices, which helped it to stabilize.

After a month of trading in a range, new analysis from Arkham showed that the exchange netflow for FLOKI went into neutral territory.

This suggests that there was a balance between buyers and sellers, which could explain why the token encountered difficulties in breaking out of its trading range.

If the buying pressure is dominant, the token’s netflow will show a negative value. Conversely, selling pressure will be indicated by a positive value. A neutral reading, as seen above, shows that there is no clear winner and the market is in a state of indecision.

Is a huge decline coming for FLOKI?

Technical indicators are flashing strong bearish signals for FLOKI.

The MACD has formed a Death Cross pattern, which happens when the blue MACD Line crosses below the orange Signal Line.

Historically, this pattern has usually foreshadowed a market decline, and FLOKI now appears to be in the same position.

Another indicator that offers a clearer perspective is the Relative Strength Index (RSI).

According to AMBCrypto's analysis, whenever the RSI crossed into the overbought zone, a huge price drop followed shortly after.

On average, the decline from the last three instances was 64.5%.

If this pattern repeats in FLOKI’s current movement, then a major decline is likely, which will put the asset in an even steeper correction from its last cycle high.

What does the derivatives market say?

The derivatives market offers a different view of FLOKI’s potential direction.

There has been a huge decrease in the number of unsettled derivative contracts in the market, which is measured by the Open Interest (OI) metric.

Over the last 24 hours, OI dropped by 6.08%, bringing the total value of FLOKI contracts to $21 million.

Interestingly, the Funding Rate shifted to the positive side at 0.0078%.

A positive Funding Rate implies that most unsettled contracts are held by long traders, which could suggest that bullish sentiment is building.

However, a closer inspection of the liquidation data reveals that the situation is not entirely optimistic.

Over the past 24 hours, long traders suffered $15,460 in losses due to closed positions, whereas short traders faced $23,310 in losses.

This disparity in liquidation amounts shows that short positions still exist in the market, which increases the possibility of more liquidations for long traders in the upcoming sessions.