Christmas came early for Cosmos (ATOM) bulls last month eventually leading to a textbook trendline break to start the new year. Is this a return to the longer-term uptrend or a fakeout in the making?
Cosmos (ATOM) had fallen hard in recent months after double topping on the daily chart above just under the $45 handle, falling over -50% back to the $20 area. This area is one of significant interest, not only as it was a strong support area back in August 2021, but also the 200 simple moving average.
And it looks like traders took that argument and ran with it as ATOM/USD shot up like a rocket over the past two weeks, going from a low of $20.21 to today’s high of $36.91–a stunning 82% gain!
This move broke the falling ‘highs’ pattern marked on daily chart above, creating a new technical argument that the return to the uptrend may be confirmed.
Fundamentally, Cosmos supports a network of apps and blockchains with a total market cap of over $170B, so it’s a big player in the crypto space, with expectations of 200 more blockchains joining the network in 2022.
That’s a narrative that’s meme worthy, and with around 59% of ATOM’s supply locked up in stakes, that could be the reason we’re seeing the current pump and a reason a FOMO may be in the cards in Q1 2022.
For now, we’re bullish on ATOM, but after the recent pop higher and the overbought signal from stochastic, we’ll be looking for a pullback and reversal candles before considering a potential position.
The broken fallen trendline lines up with the previous area of strong interest between $30 – $32, so we’ll be setting our alerts there to check back on the pair and see if ATOM is still worth staying bullish on.
But what do you all think? Is there a pullback in the cards for ATOM? Let me know in the comments section below!
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