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Cosmos’s native token ATOM has surged more than 38 percent in the last five days, validating a textbook technical indicator that now predicts additional 70 percent gains for the cryptocurrency.
ATOMUSD breaks out of its Falling Wedge pattern. Source: TradingView.com
As shown in the chart below, ATOM/USD was trading inside a Falling Wedge pattern, confirmed by its price fluctuating downwards between two converging trendlines. On September 24, the pair rebounded from the pattern’s lower trendline to close above the upper one.
ATOM/USD continued on its uptrend upon breaking the Wedge’s resistance trendline. On Monday, the pair added another 8.5 percent to its rally, bringing its net rebound up by 38 percent. It was trading at $5.12 at the time of this writing.
A Falling Wedge is a bullish indicator. According to its textbook definition, an asset trending inside the said pattern eventually breaks out to the upside. The breakout target, in this case, is as much as the maximum height of the Wedge.
In the case of ATOM, the length of its Falling Wedge shows a 71 percent upside of about $3. Therefore, its breakout target now sits at least 71 percent above the point of escalation. That is near $7.65.
At the same time, ATOMUSD is trading inside another pattern: the Ascending Channel, as flashed in purple above. Incidentally, the Wedge support from where the pair bounced upwards also serves as the lower trendline of the Ascending Channel.
According to the pattern, the Cosmos token anticipates a further push towards the upper range of the Channel – the resistance. That brings the upside target for ATOM/USD near $6.5 – almost a dollar below the Falling Wedge aim.
As ATOMUSD inches upward, their only legitimate price ceiling sits near the 50-day moving average. It is at $5.77.
The latest round of buying momentum also appeared due to Cosmos’s longevity as decentralized finance (DeFi) project. The Ethereum competitor continues to offer projects its interoperable blockchain solutions – they facilitate the transfer of data between existing chains.
Data aggregator Messari writes in one of its reports:
“Cosmos-based chains have market capitalizations that have been historically lower than their Ethereum counterparts. Several of them though have started to see some lift in the markets, suggesting DeFi enthusiasm is beginning to bubble over into other networks. This current valuation disparity makes it worthwhile to explore the relative value of the Cosmos ecosystem to that of Ethereum.”
ATOM was sitting at oversold levels by the time its rebound kicked-in. Meanwhile, Cosmos’s long-term prospects allowed traders to push the underbought token higher.
Image Credit: Refer to Source
Author: Refer to Source Yashu Gola