FLOW’s latest price rally has turned it into an overbought asset, which could mean a correction is imminent.
Flow (FLOW) showed its best daily performance on August 4, becoming the latest blockchain to support Instagram’s non-fungible token (NFT) features.
Insta Rally FLOW
Meta CEO Mark Zuckerberg announced on Aug. 4 that Instagram has expanded NFT support to an additional 100 countries in Africa, Asia Pacific, the Middle East, and the Americas. As a result, more users can post digital collectibles minted on the Flow blockchain to Instagram.
The loud integration helped FLOW rise 54% to hit an intraday high of $2.83 per token. Interestingly, the token’s massive upward movement was accompanied by a surge in daily trading volumes, confirming some weight of the bullish trend.
Daily FLOW/USD chart. Source: Trading View
As with any native blockchain asset, the ups and downs in demand for FLOW are due to the adoption of its parent chain. In general, FLOW serves as legal tender in the Flow Proof-of-Stake ecosystem for the following purposes:
Account storage deposits
Collateral for stablecoin and DeFi products
Participation in protocol management and ecosystem development
This explains the token’s bullish reaction to Instagram adoption.
Another 30% profit ahead?
From a technical standpoint, FLOW expects another 30% upside from current price levels.
The recent FLOW price trends appear to have drawn a bullish pattern on the daily chart called the “bottom of the reversal up-and-run (BARR)”. The token has now entered a breakout stage with a bullish target near the level that started the BARR bottom, around $3.20.
Daily FLOW/USD chart with BARR setting. Source: Trading View
According to seasoned analyst Tom Bulkowski, BARR patterns have “performed surprisingly well” with a 76% chance of hitting their profit target. This increases FLOW’s upside potential by another 30% to $3.20, supported by strong fundamentals.
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On the other hand, FLOW’s latest bull run took its daily Relative Strength Index (RSI) above 70, or the overbought zone, suggesting an increased risk of a selloff.
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