After gaining 185% since July, the Cosmos price is taking a well-earned rest. But ATOM must hold support, or it faces a steep drop. Following five straight days of gains, Cosmos is on course for its third consecutive daily loss. However, after jumping from $9.00 to $25.00 in a month, the bulls may not be too concerned. But, if ATOM breaks down below $20.80, they should be.
Cosmos (ATOM) aims to solve many problems facing proof-of-work protocols, offering a solution to the clumsy, expensive and slow transaction speeds. Additionally, the network has a modular framework that makes it easier for developers to build decentralised apps (dApps). This unique utility garnered a lot of investor interest at the start of 2021. Of course, like most of the market, the Cosmos price collapsed in the second quarter. Between the 7th of May and the 22nd of June, Cosmos lost more than 75% in value, dropping from $32.74 to $7.82. And despite recovering to $15.28 in early July, ATOM was back below $9.00 by the end of the month.
Although since the 20th of July, the bull market has come screaming back to life. That is up until this weekend when the Cosmos price topped out at $25.12 and has since fallen 16%. So is this the start of a major reversal, or will ATOM continue to forge a path higher?
ATOM Price Forecast
Several positive developments are evident on the daily chart. Cosmos has cleared the 50,100 and 200-day moving averages and hurdling the resistance of a descending trend line at $14.90. Furthermore, the 50-day average at $15.08 is above the 100 at $14.82 and the 200 at $14.42. This indicates upside momentum is gathering pace. Furthermore, the former trend line resistance has shifted to $14.40, which reinforces the moving averages, creating a robust support area around $15.00.
Furthermore, the price has pulled back to the previous significant support level of $20.80. Notably, before May’s crash, the price bounced several times from this area at the end of April. Not to mention, the price has again found support at this level over the last two days. Therefore, should ATOM close below $20.80, it may well slide lower. This thesis is supported by the Relative Strength Index reading of 79.75, which is extremely high, signalling an overdue reversal.
Although, the longer the Cosmos price spends trading sideways, the more the RSI will decrease, relieving the immediate pressure. And if ATOM advances beyond Sunday’s high, it could easily extend higher still. This would invalidate my theory and potentially bring Mays all-time high into focus.
Cosmos Price Chart (Daily)
For more market insights, follow Elliott on Twitter.