Why TRX Could Fall 7%?

• Tron’s RSI is forming a bearish divergence, signaling a trend reversal.
• On-chain data paints a bearish picture as the TRX long-short ratio is below one and the OI weighted funding ratio is negative.
• A daily candle close above $0.170 would invalidate the bearish thesis.

Tron (TRX) retested its resistance barrier and fell 6.1% last week. In Monday’s Asian session, it is trading at $0.1557. Tron’s price action suggests a decline ahead, as shown by the bearish divergence of the technical indicators. Additionally, the on-chain data supports the bear thesis as TRX’s long-short ratio is below one and the Oi-weighted funding ratio is negative.

Tron price is poised for a decline after retesting the resistance barrier

Tron price has retested its March 7, 2021 high of $0.170 on August 25 and is down 6.1% last week. On Monday, it is trading slightly higher by 0.06% at $0.1557.

Furthermore, the formation of a higher high on the daily chart on August 25 contrasts with the lower high of the Relative Strength Index (RSI) indicator during the same period. This development is called a bearish divergence and often leads to a trend reversal or a short-term decline.

If the resistance at $0.170 holds, Tron could drop about 7% from the current trading level of $0.1557 to retest $0.1425, the previous weekly support.

TRX/USDT Daily Chart

According to Coinglass’ OI-weighted funding ratio data, it is an important metric for traders and analysts to gauge market sentiment and predict future price movements. This index is based on futures contract yields, which are weighted by open interest rates. Generally, a positive rate (longs pay shorts) indicates bullish sentiment when longs pay shorts. Conversely, negative numbers (shorts pay longs) indicate bullishness, and shorts pay at the expense of longs.

In Tron’s case, this metric stands at -0.033%, reflecting a negative rate and indicating that shorts are paying longs. This scenario often signifies bearish sentiment in the market, suggesting potential downward pressure on the Tron price.

TRX OI Weighted Funding Rate Chart

Additionally, according to Coinglass data, Binance TRX’s long-short ratio is 0.43. This report reflects bearish sentiment in the market, as the number below one suggests that more traders anticipate the asset’s price to decline, reinforcing Tron’s bearish outlook.

Tron long-short ratio chart

However, if TRX’s daily candlestick closes above $0.170 and sets a higher high on the daily time frame, it could signal a shift in market dynamics that favors bullish sentiment. Such a change could nullify the bearish outlook, leading to a 6% rise in Tron’s price to retest the April 17, 2021, high of $0.180.