- VELVET rebounds 30%, but must reclaim nearby resistance to confirm recovery strength.
- Open interest reset suggests leverage cooled, reducing speculative market pressure.
- Exchange flows remain balanced as buyers defend support and await stronger demand.
Velvet (VELVET) attracted renewed buying interest after posting a strong daily gain, although the token still trades well below its recent peak. The latest recovery suggests buyers have started defending an important support zone after weeks of heavy selling.
Even so, technical indicators continue to show that the broader market remains cautious. Traders now face an important test, as VELVET must reclaim nearby resistance levels before confidence fully returns.
VELVET currently changes hands near $0.51 after climbing more than 30% over the past day. The token also recorded a weekly gain of more than 7%, pushing its market capitalization above $214 million.
Despite the impressive daily rally, the chart still reflects a cautious technical outlook. Price remains below the 20-day exponential moving average at $0.6520 and the 50-day EMA at $0.5379. However, it continues trading above the 100-day EMA near $0.4018, suggesting longer-term buyers remain active.
Recent price action also shows demand emerging between $0.47 and $0.50. That area now serves as immediate support alongside the stronger $0.40 level. If sellers force a breakdown below the 100-day EMA, bearish pressure could increase toward the key Fibonacci support near $0.354.
On the upside, bulls must first reclaim the $0.54 to $0.55 region before challenging the 20-day EMA around $0.65. Moreover, a successful breakout above those barriers could open the door for advances toward $0.77, followed by $1.03 and eventually $1.24.
Meanwhile, the Stochastic RSI continues recovering from deeply oversold territory. That shift suggests downside momentum has weakened. Hence, stronger buying volume could strengthen the ongoing recovery attempt.
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Open interest tells a different story. During June, leveraged positions expanded rapidly as VELVET experienced an explosive rally. Open interest later surged above $230 million before collapsing as traders closed positions and liquidations accelerated.
By July 10, open interest had declined to roughly $23.82 million while the token traded around $0.48. That sharp reduction suggests speculative positioning has normalized and excessive leverage has largely disappeared.
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Exchange activity also reflects changing investor behavior. A major inflow spike during December suggested increased selling activity as more tokens reached exchanges. However, sustained outflows throughout January and early February indicated many investors preferred holding assets away from trading platforms.
Additionally, exchange flows remained relatively quiet during the following months. The latest net inflow measured only about $23,080, highlighting balanced participation rather than aggressive buying or selling. Consequently, future price direction may depend on whether fresh demand returns alongside improving technical momentum.
Key levels remain in focus as VELVET attempts to build a recovery following its sharp correction.
Upside levels: $0.54–$0.55 (50-day EMA) represents the first resistance zone, followed by $0.65 (20-day EMA). A decisive breakout above these levels could pave the way toward $0.77, with higher targets at $1.03 and $1.24.
Downside levels: Immediate support lies between $0.47 and $0.49. Below that, the 100-day EMA at $0.40 serves as the next major defense, while $0.354 remains the critical Fibonacci support that could determine the broader trend.
Momentum signal: The Stochastic RSI has started turning higher from oversold territory, suggesting selling pressure is fading. However, buyers still need stronger trading volume to confirm a sustainable reversal.
Market positioning: Open interest has fallen sharply from late-June highs, indicating speculative leverage has largely been flushed from the market. Meanwhile, exchange flows remain relatively balanced, showing neither aggressive accumulation nor widespread distribution.
VELVET’s short-term outlook depends on whether buyers can defend the $0.47–$0.49 support zone while reclaiming resistance at $0.54 and $0.65. A successful move above those levels would strengthen bullish momentum and could trigger a broader recovery toward $0.77 and potentially $1.03.
Conversely, a break below the $0.40 support would weaken the recovery structure and increase the likelihood of a decline toward $0.354. For now, VELVET appears to be transitioning from a period of heavy selling into consolidation, with the next directional move likely determined by renewed buying volume and improving market participation.
