Here is why DUSK could rally 18%

Dusk price action shows a double-bottom technical formation, which tends to be followed by a bullish move.
On-chain data pictures a bullish outlook as DUSK's long-to-short ratio is above one.
A daily candlestick close below $0.165 would invalidate the bullish thesis.

Dusk (DUSK), a Layer 1 blockchain protocol that brings classic finance and real-world assets (RWA) on-chain, is up 4.6% on Thursday and could extend gains by 18% after the coin’s price recently retested and found support around the double-bottom pattern breakout level, a key technical area. Additionally, on-chain data such as the long-to-short ratio also hints at an upcoming rally.

Dusk price eyes for a rally

Dusk price rose and closed at $0.194 in early August after bouncing off the $0.170 level, forming a W-like structure from early to mid-August known as a double-bottom pattern that often signals a potential trend reversal favoring the bulls. On Wedesday, the Dusk price retested and found support around $0.194, which aligns with the double-bottom pattern breakout level. At the time of writing on Thursday, it is gaining 4.6% at $0.211.

If the $0.194 level holds as support, DUSK could rally 18% from its current trading level at $0.207 to retest the daily resistance at $0.248.

The Relative Strength Index (RSI) on the daily chart is trying to flip over its neutral level of 50, and the Awesome Oscillator (AO) still trades above its neutral level of zero. For the bullish momentum to be sustained, both indicators should be decisively above their neutral levels.

DUSK/USDT daily chart

Based on IntoTheBlock's In/Out of the Money Around Price (IOMAP), nearly 71 addresses accumulated 54.39 million DUSK tokens at an average price of $0.194. These addresses bought the token between $0.191 and $0.197, which makes it a key support zone.

Interestingly, the zone mentioned from a technical analysis perspective, the $0.194 level, is within this significant support area signaled by the IOMAP, making this zone a key reversal area to watch.

DUSK IOMAP chart

Additionally, Coinglass's data shows that Binance DUSK's long-to-short ratio stands at 1.47. This ratio reflects bullish sentiment in the market as a number above one suggests that more traders anticipate the price of the token to rise.

Binance DUSK long-to-short ratio chart

Despite the bullish outlook shown by technical analysis and on-chain data, if the Dusk price produces a daily candlestick close below $0.165, it would invalidate the bullish thesis because it would post a lower low on a daily time frame. This could see Dusk's price crash by 12.5% to revisit the August 5 low of $0.144.

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