A solid range formation continues to hold on Cosmos (ATOM)!
Will there be another short-term range reversal from resistance ahead or should traders watch out for an upside range break?
Here’s a chart that I’m looking at:
Cosmos (ATOM) has been an outlier so far in 2022 as one of the top tier crypto assets to avoid seeing red in January. It’s possible that bulls aren’t so ready to give up their bags just yet, especially with recent upgrades like an Ethereum bridge and the rollout of an Ethereum Virtual Machine-compatible protocol, Evmos.
These upgrades are likely to draw in liquidity and apps to the Cosmos ecosystem from Ethereum players who are tired of the insane gas fees and slow network speeds–and create more demand for the ATOM token needed to use the Cosmos network.
As we can see in the four hour price chart above of ATOM/USD, the bulls easily defended the $35 handle, contributing to the formation of a rectangle chart pattern; a classic technical pattern to watch for both reversal and breakout setups.
But with positive developments happening in the Cosmos network and a possible shift in broad risk sentiment as risk assets are pretty green on the session, we’re looking at an upside break of consolidation as the pattern to watch for a potential long trade.
So if the broad crypto market can continue to recover from this three month dip and we see a sustained break above the $45 resistance area on the chart above, that could be the start of a fresh move higher in the longer-term uptrend. And the odds of success significantly rise too if we see an explosion in users and apps on the Cosmos network, potentially sparking a rally like we saw in Solana, Avalanche, and Terra in 2021.
But if today’s risk bounce was just that–a short-term bounce–then watch the $45 handle as a potential resistance area once again as traders are likely to take profits there until the broad market environment shifts.
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