Dear readers, hello! Here Romain, for a technical analysis around the price evolution of the ATOM project. What are the major technical supports? is a rebound still possible? What evolution compared to Bitcoin? Focus on one of the leaders in Blockchain interoperability.
This analysis is offered to you in collaboration with Coin Trading and its algorithmic trading solution.
Cosmos is a blockchain whose purpose is to optimize the possibility of communication between several blockchains (interoperability concept). It is this algorithm that provides speed and efficiency of transactions on its network. The native token of Cosmos is ATOM. In addition, Cosmos offers tools to build your own Blockchain (SDK pack).
Cosmos (ATOM) – Quick zoom on the project
Overall, Cosmos is a decentralized network of independent parallel blockchains. Each of them works on the basis of BFT consensus algorithms, such as Tendermint. In other words, Cosmos is a ecosystem of blockchains capable of scaling and interacting with each other.
Before the creation of the Cosmos, blockchains were compartmentalized and unable to communicate. They were complicated to build and were only able to process a small number of transactions per second (TPS). Cosmos offers a solution to these problems, thanks to a new technical vision of how the blockchain works, which we will detail later in this guide.
After this quick appetizer, what about the situation of the ATOM cryptocurrency? Let’s take a look at its evolution, from a monthly to a daily perspective.
Monthly Chart: Elliot Waves as an Indicator
It’s been two years since the ATOM cryptocurrency is in a bullrun that has taken its prices from $1 to $45. Holy rise! However, since the highest point made at the beginning of the year, its prices have retraced and have given a first major bearish signal. This by breaking both their long-term trendline, as well as the Monthly Kijun. An event that dates back to April.
Then this correction accelerated. Blame it on the same events that led to the fall of Bitcoin and the equity markets (rate hikes, inflation, geopolitical conflicts, etc.). As a result, we are back on long-term support, which is also an old high dating from September 2020. The latter represented by the $6.80 area.
Also, the monthly chart shows us a construction in 5 clearly identifiable bullish waves. And the latter participate at the same time in the establishment of a long-term wave 1. So, following the Elliot wave theory, prices have now entered their correction period in three waves: A, B, C. That is to say a long-term wave 2. And the Fibonacci retracement indicates as an objective for this wave A the point where prices are currently located, namely the $6.50 zone.
Thereby, it will take time for ATOM to assimilate this market movement. Because if we look at the long term, the construction of these waves will obviously extend over several months.
Finally, note thata bullish signal will only be given by a breakout of $10, which represents the pivot point of this Fibonacci retracement. And that will take prices into a major wave 3.
Weekly chart: Straight line correction
After having seen the overall situation, it is interesting to zoom in on a medium-term time unit. And we could break down the Elliot wave count, but that’s not the point here. In reality, Ichimoku provides a lot of information. And the Fibonacci retracement is, in this case, also very useful.
From an Ichimoku perspective, two weekly supports stand out: SSB dishes located at $5 and $4.30. These are the two markers to watch if a new bearish acceleration occurs.
With the Fibonacci retracement, it is possible to see that the 38.2% ratio is currently serving as a strong support for prices. And the closing of this week will be essential. Because if this point holds, a rebound remains possible, with the first target being the ratio of 50%, at $9.30..
Daily chart: Is the rebound coming soon?
Finally, the daily view that breaks down the weekly candles also provides crucial information. With first of all, Ichimoku who shows no signs of a possible reversal, the Tenkan still playing the role of resistance. In particular with the Lagging Span which struggles not to break the Fibonacci ratio mentioned above. Knowing that the support is still relevant.
It is also possible to notice a greater activity in contact with this support. And the rising volumes show that bulls are defending this $6.50 area.
Also, taking a look at the RSI, we see a bullish divergence. The latter in the process of increasing with an exit from the oversold zone. Which also gives clues about a certain probability for a technical bounce which would make it possible to test the daily Tenkan again.
ATOM/BTC: Rebound attempt against the king!
For its part, the ATOM/BTC pair gives another type of information. Because if it goes up, the ATOM cryptocurrency gains value against Bitcoin, and vice versa. An interesting movement, from a technical point of view. Indeed, prices give a first reversal signal by breaking the daily Tenkan. However, and at the same time, the Daily Kijun still blocks them.
It is also interesting to note the volumes which, here too, support this increase. And in the event of a reversal, the Tenkan can always play the role of support. Otherwise, the former low will also be there as support.
Finally, in case of break of this Kijun, the objective will be the daily cloud which would allow prices to regain neutrality against the number 1 of cryptos.
Thank you for following this analysis. See you next week to dissect another cryptocurrency.
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