Understanding SkyAI’s 30% price correction and the next steps for traders

SkyAI [SKYAI] shed 4.5% of its value in the last 24 hours after a stellar rally in recent weeks. In fact, the token was up 61% for the week, and around 780% over the past month. It has been trending higher since February, with its remarkable rally accelerating in April.

After hitting an all-time high of $0.8569 on Wednesday, 06 May, SKYAI fell by around 30%. It was accompanied by a slowdown in speculative interest.

Evidence for a bearish SKYAI move in the coming days

AMBCrypto had previously reported that Binance traders were positioning themselves bearishly in the perpetual futures market.

Momentum was also getting strained, the report read, and within hours, the token saw a pullback from its all-time highs.

Coinalyze data revealed a fall in Open Interest in the last 48 hours, with the funding rate also dropping towards zero. Both signs pointed towards weakness too.

The falling OI hinted at increasingly sidelined speculators, with the falling funding rate showing that more and more participants were closing long positions and staying neutral – Sign that the long side was no longer overcrowded.

The volatility reset and unwinding market resulted in the recent correction. The question now is, how deep can this pullback go?

The path higher has been explosive for SKYAI, and the price did not stop at many places, from $0.15 to $0.86, to establish local support levels.

$0.350 and $0.467 were two levels that saw some retests before sustained gains. Therefore, a set of Fibonacci retracement levels was plotted based on the bullish swing move to ascertain key support levels.

$0.24 and $0.373 are the ones to watch out for. If the bulls are strong and demand is high, a bullish reaction from $0.467, the 50% level, is also possible.

Traders need to be alert for sudden changes in volume and Open Interest. A spike in either or both, accompanied by quick gains, could be a sign that the pullback is over.

If volume trends remain quiet, they can follow the plan of waiting for a retracement into the golden pocket before looking for a buying opportunity.

Final Summary

• SkyAI’s uptrend saw a retracement, but the bias has been bullish on the charts. 
• Traders need to assess the altcoin’s reaction at the Fibonacci retracement levels to understand if the uptrend can continue.