Cosmos: A look at how ATOM can set a new ATH on the chart

Cosmos: A look at how ATOM can set a new ATH on the chart

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

A double top formed at $44.5 kickstarted a correctional phase as ATOM cooled off from record levels. The altcoin shed 25% of its value over the past week and awaited a pushback at certain support levels. A rebound above $28.9 would initiate the next upcycle as sellers get rooted out from the market.

At the time of writing, ATOM was trading at $36, up by 2.8% over the last 24 hours.

ATOM Hourly Chart

Lower highs at $42, $38, and $36.6, along with lower lows at $35.7, $33.1, and $32, identified a bit of a downtrend for ATOM as investors locked in their gains. As selling pressure diminished, a rebound was seen at $33.4. This fueled speculations of an upwards run.

From here, a close above 29 September’s swing high of $36.6 and a resistance barrier of $38 will flush out some more selling positions and a decisive jump above $41.6 could be needed for a fresh ATH.

On the other hand, sellers can deny the same by restricting ATOM below $38. A failed breakout attempt would see ATOM test its defenses at $33.4 and $31.5. If $30 is conceded as well, ATOM’s best chance of a reversal would come from a double bottom at $28.8.

Reasoning

ATOM’s indications invited near-term opportunities for bullish traders. The RSI traded above 60 and presented further upside before reaching overbought conditions. According to the DMI, ATOM was trading within an uptrend as the +DI line maintained itself above the -DI line.

However, a weak ADX reading meant that additional price ceilings need to be toppled for a more convincing rally. Meanwhile, higher peaks on the MACD lined up favorably for buyers, but an impeding bearish crossover can be expected to keep gains in check.

Conclusion

Although ATOM’s near-term outlook was favorable, the altcoin needs to tackle some more price ceilings to fully realize its potential. A close above $38 would allow buyers to slice through some important barriers and set a new ATH.

Source