The cost of Lido DAO (LDO) dropped heavily each day after its key momentum oscillator entered into “overbought” territory.
LDO undergoes overbought correction
LDO’s cost stepped to as little as $1.04 on This summer 16 from $1.32 on This summer 15, amounting to some 20%-plus decline. The token’s sharp downside move required its cues from multiple bearish technical indicators, including its daily relative strength index (RSI) and it is 100-day exponential moving average (EMA).
LDO’s latest plunge came after it rallied over 150% in only two days, moving that concurrently pressed its daily RSI above 70 on This summer 15, thus turning it overbought.
An overbought RSI signals the rally might be nearing an finish while readying for any short-term pullback.
Meanwhile, more downside cues for that Lido DAO token originated from its 100-day EMA (the black wave within the chart above) near $1.30, which capped LDO from extending its 150% cost rally.
In the early stages, the cost action looked much like LDO’s correction in April 2022, after its RSI entered above 70 the very first time ever. Particularly, the Lido DAO token had gone through a 90%-plus cost decline to achieve $.39, its record low, by mid-June 2022.
That raises LDO’s possibility to repeat the April-June 2022 correction, although without any exact bottom around the corner. That stated, the token’s interim downside target seems near its 50-day EMA (the red wave) at $.90, lower another 20% from today’s cost.
However, a rest underneath the 50-day EMA would risk crashing LDO close to $.75, which coincides using the .618 Fib type of the Fibonacci retracement graph attracted from $.39-swing low to $1.31-swing high.
Ethereum 2. expected in September
On This summer 15, Ethereum developers confirmed their network’s much-anticipated transition to proof-of-stake from proof-of-work, dubbed “the Merge” or “Ethereum 2.,” would tentatively occur on September 19.
LDO surged nearly 25% at the time from the announcement because of its partners to Ethereum.
Particularly, LDO works as a governance token at Lido, a liquid staking platform which has locked over 4.13 million ETH (worth around $5 billion) into Merge’s official smart contract with respect to its users.
Publish Ethereum’s announcement, the amount of Ether deposited in to the Merge smart contracts via Lido elevated.
With Lido presently the greatest provider by total value staked, a effective Merge launch could bring more users to Lido, which, consequently, could boost interest in LDO tokens.
Therefore, a technical correction in LDO’s cost could follow-up having a rebound toward the 100-day EMA when the Ethereum’s plans to become proof-of-stake chain comes punctually.
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