VIRTUAL explodes 86%, then stalls – Traders, watch THIS closely

VIRTUAL token rallied 86% within the first week of January, rising from $0.642 to $1.198. After this remarkable frenzy of buying, the altcoin saw subdued demand and momentum.At the time of writing, it was trading at $0.975. A daily session close below the $1 mark would not be a good sign for the bulls in the short term.Source: Gem Insider on XCrypto investor Gem Insider noted in a post on X that the recent breakout had similarities to the one from April 2025. Back then, a breach of a descending trendline saw a rally that reached $2.5.Will the current breakout achieve similar results?VIRTUAL bulls’ defense of $1 could dictate the next moveThe Virtuals Protocol [VIRTUAL] token saw a bullish start to the year, like many other altcoins. CoinMarketCap data showed that the AI sector expanded by over 20% in the first week of the month.VIRUTAL was not the only token whose performance exceeded expectations.Source: VIRTUAL/USDT on TradingViewCan it maintain the move?The 50% retracement level of the impulse move would be the first test. If $0.918 is defended from the sellers, more upside and new highs would be highly likely.The MACD and CMF showed upward momentum and strong capital inflows at the time of writing, an encouraging sight for investors.The potential for a deeper VIRTUAL pullbackSource: SantimentSantiment data showed that there were spikes in the dormant circulation and age consumed metrics. There were two notable spikes in the past two weeks, on the 30th of December and the latest on the 8th of January.The former indicated a potential capitulation as the price sank toward new multi-month lows. The sudden turnaround to start the new year prompted a wave of profit-taking once the momentum began to slow down.Therefore, it appeared likely that further price expansion upward might face some difficulties, unless there is another wave of demand and a sentiment shift from investors.Traders’ call to action- Stick to the structureThe recent VIRTUAL rally left behind some imbalances on the 1-day timeframe. One of them aligned with the 78.6% Fibonacci retracement level, marking it as a strong demand zone.Hence, swing traders can wait for a price drop to $0.73-$0.76 to look to go long. The 1-day swing structure was bullish after the $1 supply zone was overcome earlier this month.Final ThoughtsThe Virtuals Protocol bulls might fail to defend the $1 psychological level if demand slows down.A daily session close below $1 would likely see prices dip to $0.73-$0.76, which could mark the end of the retracement.Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.