A solid range formation continues to hold on Cosmos (ATOM)!
Will there be another near-term range reversal from resistance ahead or should traders watch for an upper range break?
ATOM/USD: 4 hours
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 the bulls aren’t quite ready to give up their pockets just yet, especially with recent upgrades like an Ethereum bridge and the launch of an Ethereum Virtual Machine compatible protocol, Evmos.
These upgrades will likely pull liquidity and apps into the Cosmos ecosystem from Ethereum players who are fed up with 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 above 4-hour ATOM/USD price chart, the bulls easily defended the $35 level and helped form a rectangular chart pattern; a classic technical pattern to watch on both reversal and breakout setups.
But with positive developments on the Cosmos network and a possible shift in overall risk sentiment as risk assets are quite green during the session, we see an upside break in consolidation as the pattern to watch for a potential long trade.
So, if the broad crypto market continues to recover from this 3-month slump and we see a sustained break above the $45 resistance area on the chart above, it could be the start of a fresh move higher in the longer-term uptrend. And the odds of success also increase significantly as we see an explosion of users and apps on the Cosmos network, potentially igniting a rally like the ones we saw with Solana, Avalanche and Terra in 2021.
But if today’s risk bounce was just that – a short-term bounce – then again watch the $45 level as a potential area of resistance as traders will likely take profits there until the general market environment changes.
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