FLOW’s recent price rally has left it overbought, which could mean a correction is imminent.
On August 4, Flow (FLOW) posted its best daily performance after becoming the latest blockchain to support Instagram’s non-fungible token (NFT) capabilities.
Rally FLOW created by Insta
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 massive bullish movement of the token was accompanied by an increase in its daily trading volume, which confirms some weight of the uptrend.
Daily FLOW/USD chart. Source: Trading View
As with any native blockchain asset, the ebb and flow of FLOW demand is associated with the takeover of its parent chain. In general, FLOW serves as legal tender in the Flow Proof-of-Stake ecosystem for the following purposes:
deposits in the account
Collateral for stablecoin and DeFi products
Participate in journal management and ecosystem development
This explains the token’s upbeat reaction to the Instagram launch.
Another 30% profit ahead?
From a technical standpoint, FLOW expects another 30% upside from current price levels.
Recent FLOW price trends appear to have drawn a bullish pattern on the daily chart called a hit-and-run reversal (BARR) bottom. Now the token has entered the breakout phase, its growth target is near the level from which the lower limit of BARR began to form, 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 percent chance of hitting their profit target. This increases FLOW’s upside potential by another 30% to $3.20, which is also supported by strong fundamentals.
See also: “The Metaverse is 20+ Year Change”: Forbes Q&A with 30 Under 30 Entrepreneurs and Investors in 300+ Crypto Startups.
On the other hand, FLOW’s recent bullish run has seen the daily Relative Strength Index (RSI) rise above 70, or the overbought zone, indicating an increased risk of a selloff.
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