Is Huobi Token Megaphone Pattern Bullish or Bearish?

HUOBI:HTUSDT   Huobi Token / Tether USD
Over the past 3.5 months, Huobi Token (HT) has been developing a megaphone pattern, also known as the broadening pattern. The pattern is neither bullish nor bearish, but it hints at a period of heightened volatility as long as HT's price remains trapped inside the megaphone support and resistance levels.

HT Megaphone Pattern
The megaphone pattern can be recognized by successive higher highs and lower lows. On the price chart, this pattern is visible by two diverging trendlines. Usually, the pattern marks a period of high volatility with no clear market direction.

HT's price is testing the upper resistance trendline of the megaphone pattern around the $7.10 level.

RSI Oscillator
After the recent sharp rally, HT's price is greatly overbought. The Relative Strength Index (RSI) has reached 84, its highest reading since February 2021. Fears of the rally losing momentum are justified, as other technical factors are calling for a pause.

Aside from extreme overbought levels, HT's price is also battling the key 200-day simple moving average.

200-Day Simple Moving Average
While we broke above the 200-day simple moving average, it remains to be seen how this will play out within the megaphone pattern. For a fundamental shift in the market sentiment, we need multiple daily closes above the 200-day SMA.

The current daily candle already shows signs of rejection at the megaphone resistance trendline, which may be another sign that, in the short term, the bullish momentum is running out of steam.

Looking forward: To the downside, the first support area is the $5.00 big psychological level. A daily break and close below $5.00 will eventually open the door for a retest of the lower support trendline.

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