After holding the $4.5 support level, Injective showed strong bullish momentum. The altcoin rebounded to $5.4 before slightly retracing.
As of this writing, Injective [$INJ] traded at $5.01, up 8% on the daily charts. Over the same period, the altcoins trading volume climbed 113% to $169 million, indicating strong market activity.
Injective rebounds on increased speculation
Injective [$INJ] mostly rebounded, largely driven by increased speculative demand. According to CoinGlass data, the altcoins Open Interest [OI] rose 17% to $103 million while the Derivatives Volume jumped 168% to $468 million.
Typically, when OI and volume rise together, it indicates increased participation with traders opening new positions. These positions could either be shorts or longs.
Meanwhile, the Long/Short Ratio rose above 1 across Binance and OKX, with the Binance Top Traders ratio reaching 1.6. This suggests that traders on these exchanges mostly took long positions.
However, the overall ratio remains extremely low, at around 0.6, suggesting that, apart from OKX and Binance, traders elsewhere are shorting the market.
The market still faces intense bearish pressure
Although speculative activity returned to the market, sellers have remained extremely active across the spot and futures markets.
Source: CoinGlass
On the Futures side, outflows have dominated the market for seven consecutive days. On the 19th of May, Futures Outflow rose to $124.9 million while inflows dropped to $121.4 million.
As a result, Futures Netflow dropped to -$3.4 million, a clear sign of aggressive selling activity. On the Spot side, sellers rushed to cash out after $INJ rebounded.
CoinGlass data showed that Spot Netflow rose to $903k, further confirming intense profit-taking activity. With sellers dominating both sides, this suggests a lack of long-term conviction among market participants.
Source: CoinGlass
Often, such stretched selling pressure has preceded a weakened market structure, leading to lower prices.
What momentum indicators suggest
Injective momentum remains strong despite increased profit-taking. The altcoins ADX of the Directional Movement Index (DMI) rose to 57, while the positive index sits at 45.
ADX above 50 indicates a very strong trend, and with the positive Index above the negative Index, it suggests a strong upside.
Additionally, the RSI EMA Dispersation indicator showed RSI at 69 and the signal line at 66. With Upper BB well above these levels, it suggests the trend remains bullish.
Source: TradingView
However, the market direction is starting to cool off after an extended expansion. These momentum indicators signal two things: sideways movement or a smaller pullback.
Therefore, if the profit taking persists, Injective is likely to drop to $4.5 again. However, with capital still flowing into futures, if demand holds, $INJ will hold $5 and target a flip of the $5.5 resistance.
In doing so, the altcoin will be strong enough to eye $6.
Final Summary
- $INJ successfully held $4.5 support, then rebounded to $5.4 before retracing to $5.
- Injective rebounded, largely driven by increased speculation, but the threat of sellers remains strong, posing the risk of another slip.