Key takeaways
What is the main bullish signal for a possible TRX rally?
A rising ratio of reserves to loans, indicating greater liquidity and a lower risk of overleveraging.
What is the key technical condition for TRX to achieve its price targets?
TRX must successfully cross and stay above the descending resistance line on the chart.
October has been a bearish month for Tron [TRX] investors so far, and the asset saw an overall performance drop of around 11% over the period.
While distribution continues, the broader outlook suggests TRX could be gearing up for a rally as capital reserves continue to pave the way.
Reserve hike
There has been a significant increase in available reserves within the Tron ecosystem.
This growth is due to investors depositing more jTRX and jUSDT tokens (wrapped versions of TRX and USDT) which are used for DeFi and lending purposes.
Notably, the reserve-to-loan ratio has continued to rise, implying that there are more tokens available compared to the amount lent in the market.
Source: Alphractal
Market analyst Joao Wedson noted that this trend has chilled overleveraged players. According to their analysis, TRX could recover soon because,
“Historically, this configuration has marked the initial phase of new TRX rallies.”
The accumulation is increasing
Despite the recent increase in reserves, TRX still reflects weak sentiment on shorter timeframes.
In the last 24 hours, the asset has seen a pullback of approximately 1.24% as retail spot investors sold approximately $2.22 million worth of TRX.
Source: CoinGlass
It is a very different case in the upper time frame. According to CoinGlass dataSpot investors have recorded net accumulation totaling $11.21 million in TRX since the start of the week on October 27.
The Accumulation/Distribution (A/D) indicator shows a similar outlook on the chart. Right now, further accumulation is occurring in the market.
The total accumulation currently stands at around 122 billion TRX, showing that increased buying activity is taking place across the market.
Source: TradingView
This broad accumulation implies that the overall outlook remains bullish, strengthening the trend that a rally is likely soon.
Technical perspectives
TRX’s potential for a rally depends on its ability to cross above the descending resistance line on the chart.
This level has acted as a demand zone on several occasions, implying that it could trigger a rally from this point if it is successfully surpassed.
A confirmed break above this descending resistance could take TRX to the target level of $0.32 on the chart.
The sustained momentum could push the asset further towards $0.35 and eventually $0.37, according to market projections.
Source: TradingView
