INJ Faces Overextension: High-Volume Top Signals Imminent Pullback—How to Trade the Retrace

Step-by-Step Technical Analysis of Injective (INJ)

1. Trend Analysis

• Medium-term (3 months): After a substantial drawdown in March and April (highs >$13, lows near $7), INJ has staged a robust bullish recovery from late April onward, now trading near $14.65—more than 100% gain off the March lows.
• Short-term (1 week): The recent surge began May 21 ($12), spiked to $15+ May 27–28. Highest daily volumes coincide with upswings (notably May 22, 23, 27: 217M, 264M, and 217M), indicating strong buyer conviction.
• Intraday: On May 28, the price reached as high as $15.43, but pulled back several times to the $14.60–$14.90 area. The $15.40–$15.45 level acted as strong intraday resistance, with multiple failures to close above.

2. Volume Analysis

• Recent Volume Spikes: Highest volumes in the last 3 months occurred during strong impulsive upward moves (May 22–23: 217M, 264M). The move to new highs was backed by rising volume—a hallmark of sustainable upside moves.
• Declining Volumes: The latest hourly candles show reduced volumes, suggesting sellers are gaining ground after the initial push, raising probability of consolidation or short-term retracement.

3. Support & Resistance Levels

• Immediate Support: $14.45–$14.60 zone (multiple hourly touches, including the last price print of $14.634). Next support at $14.00 (May 26–28 price floor).
• Immediate Resistance: $15.40–$15.45 (intraday highs, repeated rejection); $15.00–$15.10 (round-number psych level and prev. hourly resistance).

4. Candlestick & Pattern Recognition

• Daily: May 27–28 produced large wicks above $15, signaling buying pressure is met by substantial profit-taking/selling.
• Short-term: Recent hourly candles alternately show attempts to reclaim highs failing—forming a potential double/treble top at $15.40–$15.45, an exhaustion signal.

5. Momentum Indicators

• RSI (estimated): The explosive rally from $12 to $15 likely pushed daily RSI into overbought territory (>70). Hourly RSI readings based on price volatility (strong bursts, then sharp retraces) would suggest momentum is waning at these levels.
• MACD (qualitative): Strong bullish crossover occurred May 21–22, but the latest sideways price action is suggestive of a possible flattening or bearish histogram turn.

6. Moving Averages

• Short-term MA (5/10): Price is currently above short-term MAs, but last few hours are showing convergence of price and fast MAs (flattening out). This may signal loss of bullish momentum.
• Medium-term MA (20/50): Recent violent rally pulled the price well above medium-term averages, confirming trend reversal, but short-term overextension is evident.

7. Volatility / Bollinger Bands (est.)

• After a sharp squeeze up to $15.43, price has reverted to its mean ($14.60–$14.90), suggesting upper bands have been tested and short-term volatility is contracting—often seen before a price pullback or sideways phase.

8. Fibonacci Retracement Levels

• Move: $11.80 → $15.43: Key Fib retracement to look for: 23.6% at ~$14.65 (current), 38.2% at ~$14.15, 50% at ~$13.60. If $14.60 fails, $14.15 and $13.60 are potential targets for pullback.

9. Orderbook & Tape Reading (Estimation)

• Multiple failed attempts to break $15.40–$15.45 suggest liquidation of late buyers and increasing sell-side liquidity above $15.

10. Pattern Synthesis & Probabilistic Outlook

• The overall structure is bullish, but the short-term risk/reward at $14.65 is skewed to the downside after a parabolic run and repeated intraday failures at new highs. Decreasing volume, momentum exhaustion, and long shadows on recent candles suggest an imminent retracement.
• Given the typical behavior after such sharp breakouts—especially with high volume tops—historically the probability of a significant retrace in the next 24h is high. Primary targets: $14.15, $13.70. Upside risk: Only if $15.45 breaks and holds, suggesting a new leg up (low likelihood given repeated failures).

Conclusion

Sell (Short Position): The optimal strategy in the next 24 hours is to take a short, betting on a retrace towards the $14.15–$13.70 range. Wait for a weak bounce towards $14.80 (prior intraday highs and short-term resistance) for optimal entry, though current price is already in the short zone. Take-profit target set just above the 38.2% Fib and pre-breakout support at $14.15.