Arbitrum May Reverse Its Trend

Struggling to gain ground in 2024, Arbitrum (ARB) experienced a 26% drop in its value since the start of the year. It has been experiencing a prolonged bearish corrective phase, creating an unfavorable environment for investors and short-term traders looking to purchase this cryptocurrency.

During May, however, the promising cryptocurrency spiked as much as 38%, and recent technical indicators suggest a potential reversal may be imminent.

Daily time frame analysis

ARBUSD - 1 Day Time Frame

Despite omnipresent bearish market structures, the breaking of a lower low has opened the door for traders and investors to consider entering buy positions. It is essential, however, not to be swayed by initial euphoria and to view price movements objectively from multiple perspectives.

The current short-term range is defined precisely between resistance and support identified by the Fair Value Gaps (FVG). On the provided chart, these zones are depicted as blue rectangles.

When to buy ARB?

For those considering buy positions, the likelihood of a successful trade increases if Internal Sell-side Liquidity is chosen. It is critical that the price remains above this support zone on the daily timeframe, although a wick dipping below it is acceptable, as there is an Order Block (OB) immediately below the support, indicating a potential shift in order flow.

Both bullish parameters are situated in the Discount zone below the Fibonacci level of 0.5, offering potential purchases at relatively low prices. A Stop Loss (SL) order could be placed below the internal low.

If the price closes below the support zone, traders should consider selling off some of the volume. The first Take Profit (TP) point could be set at the level where the External Buy-side Liquidity begins.

The behavior of the price within the resistance zone is also critical; for buy positions, it would be favorable for the price to close above the 0.5 level of this zone and subsequently above the entire resistance.