- Enjin Coin extends the bearish leg below a rectangle formation on the four-hour chart.
- Support at the 50 SMA must be defended at all costs to avoid ENJ declines under $2.
- The profit or loss on-chain model has reset, implying that Enjin Coin is back in the buy zone.
Enjin Coin appears to have engaged reverse gears after spending almost a fortnight in a ranging channel. Resistance at $2.6 remained intact despite frequent advances by the bulls. At the time of writing, ENJ is teetering at $2.15, amid risks of plunging under $2.
Enjin Coin Bleeds After Technical Pattern Breakdown
A rectangle formation on the four-hour chart means that Enjin Coin could either swing significantly upward or incur massive losses. The seller congestion at $2.6 got bulls exhausted, leading to the ongoing breakdown.
The rectangle pattern support has already given in while bulls focus on securing an anchor at the 50 Simple Moving Average (SMA) on the four-hour chart. Trading beneath this zone could trigger many selling orders amid increased market instability.
The downtrend has been validated by the Relative Strength Index (RSI) on the four-hour chart. The indicator measures the strength of a trend as the name insinuates and identifies oversold and overbought conditions. If the negative gradient prevails, Enjin Coin will likely dive further.
ENJ/USD four-hour chart
Enjin Coin network growth has been on a downward trend since the number of new addresses joining the network topped out at 2,750 on March 15. The spike was followed by a colossal drop to nearly 750, representing a 72.7% decline. An attempt to recover failed at roughly 1,250, hence the bearish outlook for both the token price and the network’s adoption.
Enjin Coin network growth
Looking At The Other Side Of The Picture
The market value realized value (MVRV) by Santiment shows that the profit/loss ratio has reset. In other words, most ENJ holders are currently at a loss, based on the MVRV standing at -0.07%.
Enjin Coin MVRV chart
According to Santiment, the metric measures “the average profit or loss of those holding ENJ tokens which moved in the last 30 days, based on the price when each token last moved.” A low MVRV ratio shows that the asset is back in the buy zone and investors are unlikely to sell.
Moreover, holding above the 50 SMA on the four-hour chart would ensure market stability. If buying pressure builds from this level, Enjin Coin will commence the breakout toward the hurdle at $2.6.