Cosmos (ATOM) Price Bounces From Long-Term Support, Is A Rally Following?
The Cosmos (ATOM) price has bounced off a long-term support zone and is trading inside a bullish pattern. A breakout could accelerate the increase.
Long-term Outlook
The price of Cosmos (ATOM) has been decreasing since being rejected at the long-term resistance at $15.5 at the end of January 2023. This downward movement has been contained within a descending wedge, bringing the price to a crucial support level at $6.5.
Currently, the price is approaching the wedge’s apex, suggesting an imminent decisive move.
The bulls seem to have the upper hand at the moment, indicated by:
- The descending wedge pattern being a bullish one, often leading to breakouts.
- The price has bounced from the support level at $6.5 and the wedge’s support line last week (red arrow). This move created a swing low, often followed by a recovery.
- The weekly RSI has risen from the oversold region and is breaking above the resistance line. This indicates the bulls are attempting a comeback.
If a breakout above the wedge occurs, the ATOM price could rise to the next resistance level at $10.
Short-term Resistance Line
The 4-hour chart shows that the ATOM price has broken above the short-term resistance line formed since July 14. This suggests the short-term correction has likely ended, and a new uptrend may follow.
However, the 4-hour RSI has formed a significant bearish divergence. This occurs when the rally is not supported by momentum and often leads to a price correction.
Therefore, the ATOM price may retrace to the short-term support level at $7 before continuing its upward move.
The potential target for this movement is the resistance level at $8.5.
Conclusion
Technical prospects suggest that the ATOM price will continue to rise in the near future, with the nearest target being $8.5 and potentially reaching $10.
However, there is a possibility of a retracement to the $7 support level before resuming the upward trend.
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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