Cosmos (ATOM) Rejected By Psychological Resistance At $10, What’s Next?
The Cosmos (ATOM) price is trading within a long-term bullish pattern and has confirmed the previous key resistance area as support. It is expected to continue rising in the near future.
Descending Parallel Channel
The Cosmos (ATOM) price has been trading within a descending parallel channel since September 2022. This is a bullish pattern that often leads to breakouts in most cases. This means that the bulls have an advantage while the price is within this pattern.
Indeed, after bouncing from the channel’s support during the week of October 16 to 22, the ATOM price broke above the significant resistance area at $8.6 and confirmed it as support in the previous week (green arrow).
The weekly RSI (Relative Strength Index) has broken above the long-term descending resistance line and risen above the 50 level, supporting the continuation of the uptrend.
Therefore, the ATOM price could potentially rise by 35.66% to the channel’s resistance at $12.7. Since this line coincides with a horizontal resistance zone, the bears is likely to defend this level strongly.
The daily chart shows that the ATOM price is being rejected by the psychological resistance level at $10. However, what is encouraging is that the bulls have not given up much ground.
In fact, the ATOM price formed a bullish engulfing pattern (green ellipse) on November 22 and reclaimed the 20-day EMA shortly after.
In an uptrend, the 20-day EMA often acts as a significant support. Therefore, this development indicates a shift in sentiment from selling on rallies to buying on dips, and the ATOM price is expected to reach new highs soon.
This is further emphasized as the ATOM price has confirmed the 20-day EMA as support on November 27, 28, and 29 (green arrows).
Therefore, the ATOM price is likely to break above the $10 resistance in the coming days.
The most likely scenario suggests that the ATOM price will break above the $10 resistance and rise to the next resistance zone at $12.7.
This bullish outlook would be invalidated if the ATOM price breaks down below the critical support zone at $8.6.
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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