FLOW latest price rally has turned it into an "overbought" asset, which could amount to an imminent correction.
Flow (FLOW) logged its best daily performance on Aug.4 after becoming the latest blockchain to support Instagram's nonfungible token (NFT) features.
Insta-made FLOW rally
Meta CEO Mark Zuckerberg announced on Aug. 4 that Instagram had expanded its NFT support to 100 more countries in Africa, the Asia-Pacific, the Middle East and the Americas. As a result, more users can post digital collectibles minted on the Flow blockchain on Instagram.
The high-profile integration helped FLOW surge 54% to reach an intraday high of $2.83 a token. Interestingly, the token's massive upside move accompanied a spike in its daily trading volumes, confirming some weight behind the bullish trend.
Like any blockchain native asset, the ups and downs in FLOW's demand are tied to the adoption of its parent chain. In general, FLOW serves as a legal tender within the Flow's proof-of-stake ecosystem for the following purposes:
- Staking
- Staking rewards
- Transaction fees
- Account storage deposits
- Collateral for a stablecoin and DeFi products
- Participation in protocol governance and ecosystem development
That explains the token's bullish response to Instagram's adoption.
Another 30% gains ahead?
From a technical perspective, FLOW eyes another 30% rally from its current price levels.
FLOW's recent price trends appear to have painted a bullish pattern called the "Bump-and-Run-Reversal (BARR) bottom" on its daily chart. Now, the token has entered a breakout stage with its upside target near the level where the BARR bottom's formation began at around $3.20.
According to veteran analyst Tom Bulkowski, BARR patterns are "surprisingly good performers," with a 76% chance of meeting its profit target. That raises FLOW's potential to rise another 30% to $3.20, further supported by strong fundamentals.
On the flip side, FLOW's latest bull run has pushed its daily relative strength index (RSI) above 70, or overbought territory, which suggests heightened sell-off risks.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
