Kite ($KITE) has extended its gains, rising 14% at the time of writing. The rally is supported by a bullish chart pattern, although capital flows and potential profit-taking by spot traders could limit the token’s short-term upside.
Kite price forms bullish head-and-shoulders pattern
Kite’s price is forming a bullish head-and-shoulders pattern, which could precede a breakout and drive the token higher. At the time of writing, $KITE was trading around the pattern’s second shoulder while testing the neckline marked by the horizontal line.
The neckline is now the key technical level for the rally. A break above it could trigger a short-term move of about 21%, potentially pushing Kite toward $0.164. If bullish momentum remains strong, $KITE could then advance toward $0.198.
However, continued consolidation around the neckline or the formation of a lower low compared with the recent bullish candle would invalidate the pattern. In that scenario, $KITE could remain range-bound or face further downside.
Indicators point to stronger bullish momentum
Market indicators also suggest that Kite’s price outlook has strengthened. The Money Flow Index (MFI), which tracks capital flowing into and out of an asset, has continued to rise and remains elevated at 79.65, indicating that capital inflows are present.
However, those inflows have flattened rather than continuing to climb. A move above 80 would typically indicate that $KITE is overbought and may have moved beyond its fair value.
The Average Directional Index (ADX), which measures the strength of a market trend, also indicates that the current price direction remains relatively strong. A rising ADX combined with an advancing price suggests that Kite is gaining momentum, potentially supporting additional near-term upside.
Could spot market flows limit the Kite rally?
Despite the structurally bullish setup, spot trader activity presents a potential obstacle. Spot market netflow was positive at press time, meaning more capital was flowing into exchanges than leaving them.
Positive exchange netflow can suggest that investors are preparing to sell, which may place pressure on the price. The trend has lasted for more than three days, with cumulative netflow reaching $291,000 during that period.
The same pattern was also visible over the previous 24 hours, potentially weakening Kite’s near-term price outlook despite the token’s strong momentum indicators.
Kite price outlook
$KITE is testing the neckline of a bullish head-and-shoulders pattern. A successful breakout could open the way toward $0.164, with a stronger continuation potentially taking the token to $0.198.
Positive spot netflow could limit the rally as traders appear to be positioning for profit-taking, even though technical momentum remains strong.
Source: cryptonews.net
