Yearn.finance (YFI) looks poised for a price correction afterward rising five days in a row to approach $42,000. Notably, an absence of enough ownership volume coupled with overbought risks is behind the bearish outlook.

The YFI price rally and so far

YFI'southward price surged by a trivial over 47% in five days to $41,970 as traders rotated majuscule out of "pinnacle-cap" cryptocurrencies such every bit Bitcoin (BTC) and Ether (ETH) and looked for short-term opportunities in the altcoin market.

Yearn.finance was among the beneficiary of the so-called capital migration, given its value against BTC and ETH rose well-nigh 47% and 41.50%, respectively, in simply five days. Meanwhile, at the core of traders' sudden ownership interest in the YFI markets was a token buyback programme.

YFI/ETH and YFI/BTC daily price performances later token buyback program proclamation. Source: TradingView

On Dec. 16, the Yearn.finance team announced that it had purchased more than than $seven.5 1000000 worth of YFI tokens from the open market at an average price of $26,651 per unit. It also revealed $45 million actress cash in its treasury that it would use to go along its YFI buyback spree.

Additionally, the Yearn.finance community besides proposed that the YFI treasury directly a portion of the token buyback to reward YFI holders who actively participate in Yearn Governance. The proposal (full details here) is currently in its voting stage.

YFI'south price surged by more than than 100% against the United States dollar after the token buyback announcement.

YFI's cost correction risks

Withal, YFI'south trading volume fell despite the rally, suggesting the depression conviction among traders in its upward motility.

YFI/USD daily price chart featuring toll-volume divergence. Source: TradingView

Typically, a surly divergence between toll and volume leads to either correction or consolidation until conviction increases. As a result, the likelihood of YFI at to the lowest degree pausing its ongoing price rally is high, with its daily relative strength index also entering its overbought zone in a higher place 70, a sell signal.

Related: YFI price gains 46% in just four days after Yearn.finance'southward $7.5M buyback

Additionally, the Yearn.finance token's latest cost rally has brought it closer to a known inflection zone about $xl,000, every bit shown via the Fibonacci retracement graph in the nautical chart below.

YFI/USD iii-day price chart featuring Fib entry and exit levels. Source: TradingView

In particular, the 0.618 Fib line near $forty,113 has been limiting YFI's upside intraday attempts. The same level was instrumental in stopping the token's price rally between October and November, which later led YFI's price to its 12-month low almost $17,000.

Nevertheless, if bulls manage to push YFI's price to a higher place the 0.618 line decisively, they may also take the token out of its multi-month range defined by near $25,500 as support and $forty,000 equally resistance. In that scenario, YFI'south next upside target may motility toward the 0.5 Fib line around $51,000.

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