Why ZIL could rise 20%

• Zilliqa price has broken out of the falling wedge pattern, signaling an upward price action ahead.
• On-chain data shows that ZIL’s open interest is rising and the long-short ratio is above one, suggesting a bullish move.
• A daily candle close below $0.0123 would invalidate the bullish thesis.

The price of Zilliqa (ZIL) broke the bearish pattern on Monday and rose 4.6% over the next two days. At the time of writing, it is trading slightly down 0.5% on Wednesday. On-chain data shows that ZIL’s open interest (OI) is rising and the long-short ratio is above one, suggesting a bullish move for Zilliqa in the coming days.

Zilliqa price shows potential for a rally ahead

Zilliqa’s price broke the bearish pattern formed by connecting multiple highs and lows with a mid-March trend line on Monday and rose 4.6% over the next two days.

On Wednesday, it faces resistance around the 50% retracement level (pulled from the July 22 high to the August 5 low) at $0.0145 and is trading slightly below 0.5% at $0.0142 .

If ZIL closes above the $0.0145 level, it could rally 20% to retest the July 29 high of $0.0175.

The Relative Strength Index (RSI) and the Awesome Oscillator (AO) on the daily chart are about to break their neutral levels of 50 and zero, respectively. Both indicators need to trade above their neutral levels for bullish momentum to be sustained.

ZIL/USDT daily chart

Data from CoinGlass shows that Zilliqa futures OI on exchanges is also rising. OI indicates the total number of outstanding derivative contracts that have not been settled (settled by delivery) and whether the cash flows in the contract are increasing or decreasing.

OI growth represents new or additional money entering the market and new purchases, suggesting an optimistic trend. When OI falls, it is usually a sign that the market is liquidating, more investors are leaving and the current price trend is ending.

The chart below shows that ZIL’s OI increased from $8.27 million on Monday to $9.67 million on Thursday, indicating that new or additional money is entering the market and new purchases are taking place.

ZIL Open Interest chart

Additionally, according to Coinglass data, ZIL’s long-short ratio is 1.12. This report reflects bullish sentiment in the market as the number above suggests that more trades are anticipating the asset’s price to rise, reinforcing Zilliqa’s bullish outlook.

Chart of ZIL long-short ratio

Despite the bullish thesis signaled by both on-chain data and technical analysis, the outlook will change to the downside if ZIL’s daily candle closes below the August 7 low of $0.0123. This scenario could lead to a 12% crash to retest the August 5 low of $0.0108.