Cryptocurrency

Cosmos: Is taking a short position on ATOM the way to go

Disclaimer: The findings of the following evaluation are the sole opinions of the author and shouldn’t be thought-about funding recommendation

After hitting its ATH on 7 January, Cosmos (ATOM) bears have stepped in to exert constant strain. The gradual decline under its multi-month lengthy trendline resistance (earlier help) gave sellers the well-needed power for a trend-altering reversal.

ATOM is now in a difficult spot. The 23.6% Fibonacci resistance may reshape the trajectory of the near-term development. At press time, ATOM was buying and selling at $11.67, up by 3.08percentin the final 24 hours.

ATOM Daily Chart

Source: TradingView, ATOM/USDT

The latest bearish section (from its April highs) led the alt to lose greater than 71.4% of its worth and plunge in the direction of its 10-month low on 12 May. The drop under the eight-month-long trendline help flipped the trajectory in the sellers’ favor. Thus, they discovered renewed promoting strain to gasoline the bearish hearth.

The downfall pushed the alt under its 20-50-200 EMA on the day by day timeframe. The 20 EMA alongside the Fibonacci resistances has restrained all bullish revival endeavours over the final month. Keeping in thoughts the latest rejection of upper costs at the 23.6% degree and the widening hole between the EMA ribbons, the bears claimed to have a superior edge.

A sequence of candles above the Point of Control (POC, crimson) could lead on the altcoin into a short-term tight section. Any shut under this mark would re-open a path in the direction of the $9.6-level help earlier than a bullish comeback chance. Looking at the overextended hole between the 20 EMA and 50 EMA, the bulls would purpose to push for extra after a seemingly sluggish section in the days to come.

Rationale

Cosmos Is taking a short position on ATOM the way

Source: TradingView, ATOM/USDT

The RSI poked its document low on 12 May and revived from this degree because it endeavored to take a look at the 35-resistance. Any reversals from its trendline or horizontal resistance would delay the revival chance on ATOM’s charts.

The CMF took a related position. While being pretty under the zero-mark submit a bearish divergence with the value, it favoured the sellers.

Conclusion

The present devaluation has considerably hampered the shopping for capacity to propel an uptick in excessive volumes. The present bearish pennant setup alongside the 23.6% Fibonacci resistance may play spoilsport for the near-term features. But, with an overextended hole of 20 and 50 EMA, the patrons would possibly purpose for an eventual comeback in the coming days.

Finally, market sentiment evaluation to complement these technical components is important for making a worthwhile transfer.

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