Cosmos (ATOM) Price Bounces From Critical Support, Is A Strong Rally Following?
The price of Cosmos (ATOM) is trading inside a long-term bullish pattern and bounced from the important Fib retracement support level. It is expected to rise in the near future.
Descending Parallel Channel
The price of Cosmos (ATOM) has been trading inside a descending parallel channel since September 2022. This is a bullish pattern, which often leads to a breakout in most cases. This means that the bulls have an advantage when the price trades inside this pattern.
After being rejected by the channel’s resistance line in the last week of 2023 (red arrow), the ATOM price is currently consolidating above the channel’s middle line (blue arrow).
Since the channel’s middle line coincides with the 0.618 Fib retracement support level of the previous upward move, the bulls will defend this level strongly.
The weekly RSI has broken out above the long-term downtrend line and has an upward trend, supporting the possibility of a bounce.
If the price bounces, it could rise to the channel’s resistance line at $12.2. A breakout above the channel would help the price increase by 80.45% to the next important resistance zone at $17.
The daily chart shows that the ATOM price bounced from the channel’s middle line on January 23, 2024 (blue arrow) and created a bullish pinbar candle.
The daily RSI has stopped decreasing and created a bullish divergence (blue line). This is a signal that often occurs before recoveries.
Therefore, the ATOM price could rise to the channel’s resistance line at $12.2 in the next few days.
The most likely scenario suggests that the ATOM price will continue to rise in the near future. The nearest target is $12.2 and higher to $17.
The bullish view will be invalidated if the ATOM price closes below the channel’s middle line at $8.7 on the daily time frame.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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