ATOM/USD has been on a tear to the upside, breaking previous ‘highs’ and doubling price in September.
Is it time for the rally to cool and where could potential buyers be lurking in the meantime?
Potential Support at Broken Resistance on ATOM?
Pip Diddy last looked at Cosmos against the Greenback (ATOM/USD) almost two weeks ago for a potential long position as traders were riding the $20 support area.
ATOM/USD’s price hit a high of $44.80 this weekend before seeing selling pressure in today’s session, likely stemming from broad risk-off sentiment across the financial markets to start the new week.
If the current risk-off themes of Delta variant uncertainty, potential tapering of monetary policy stimulus, and the current headlines of potential financial market contagion from the Evergrande Group’s debt crisis lead to a true reversal in global risk sentiment, ATOM/USD may step back further from all-time highs.
Traders tend to broadly de-risk indiscriminately in these situations in the short-to-medium term, which may present a longer-term buying opportunity on ATOM for those bullish on the Cosmos project.
Again, the Cosmos project is a layer-1 protocol focused on blockchain interoperability, making it an important project to watch as cross-chain capabilities will likely be a key component to the adoption of Decentralized Finance (DeFi).
This evolution already seems to be accelerating, evidenced by the number of transactions rising quickly on Cosmos’s Inter-Blockchain Communications Protocol (IBC), and with this technology being introduced only this year, odds are that we’re only seeing just the beginning.
With good odds that interest in the Cosmos protocol and the ATOM token will likely stay strong, longer-term players may want to lean bullish until the fundamentals tell a different story.
But with global risk sentiment possibly turning negative on risk assets, longer-term players may also want to see if current market conditions lead to a dip in ATOM/USD before considering a long position.
For us, we’ll be watching for a dip to the previous broken resistance area / Fibonacci retracement area around $25 – $30 handles. If we see a retest there and bullish reversal candle formations form, it makes sense to consider a long position if broad risk sentiment leans less negative and Cosmos’s fundies continue to look bullish.
But what do you guys think? Is ATOM a buy longer-term against the Greenback? Will the pair pull back all the way to Fibs and broken resistance, or is a deeper pullback ahead?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.